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foreclose a subsequent finding to the contrary depending

4. Alleging capacity to sue or be sued on the evidence


section 4, Rule 8 - Under the Rules of Court, if the defendant is a foreign
Section 4. Capacity. — Facts showing the capacity of a party corporation doing business in the Philippines, summons
to sue or be sued or the authority of a party to sue or be sued may be served on
in a representative capacity or the legal existence of an (a) its resident agent designated in accordance with law;
organized association of person that is made a party, must be (b) if there is no resident agent, the government official
averred. A party desiring to raise an issue as to the legal designated by law to that effect; or
existence of any party or the capacity of any party to sue or be (c) any of its officer or agent within the Philippines.
sued in a representative capacity, shall do so by specific
denial, which shall include such supporting particulars as are
peculiarly within the pleader's knowledge. (4) - Private respondent alleged in its complaint that Trans-
World is petitioner’s agent, so that the service was made
on the latter.
section 16(d), Rule 16 o Such general allegation is insufficient to show
Section 1. Grounds. — Within the time for but before filing the the agency relationship between petitioner and
answer to the complaint or pleading asserting a claim, a motion Trans-World.
to dismiss may be made on any of the following grounds: o However, although there is no requirement to
(d) That the plaintiff has no legal capacity to sue; first substantiate the allegation of agency yet it is
necessary that there must be specific allegations
in the complaint that establishes the connection
between the principal foreign corporation and its
alleged agent with respect to the transaction in
French Oil v. CA, 295 S 462 (1998) question.
- Ludo and Luym Oleochemical, Co. filed a complaint for - For purposes of the rules on summons, the determination
breach of contract with damages against French Oil and of principal-agent relationship from the allegations in the
its alleged Philippine agent Trans-World Trading complaint is only preliminary and is not even conclusive
Company as to liability. Nothing bars the court from later making a
o French Oil Mill Machinery is a corporation with different finding after the parties had substantiated their
principal office at Piqua, Ohio, USA respective allegations with respect to agency should the
- Summons was served on Trans-World which moved to same be disputed.
dismiss the complaint arguing that it is not petitioner’s - As found by both courts below, petitioner treated Trans-
agent. World as its Philippine agent in the assailed transaction.
- French Oil itself filed a special appearance with MTD Such factual assessment is binding on this Court and will
contending that the court had no jurisdiction over its not be disturbed as no exceptional circumstances nor
person due to improper service of summons. It argued cogent reasons were shown to justify its reversal
that: - the filing of an answer per se should not be automatically
o it is not doing business in the Philippines treated as voluntary appearance by the defendant for
o Trans-World is not its agent purposes of summons. It should be noted that when the
- RTC dismissed the complaint for lack of jurisdiction over appearance of a defendant is precisely to object to the
petitioner jurisdiction of the court over his person, it cannot be
- Upon MR, RTC reversed the order of dismissal and ruled considered as appearance in court
that summons was properly served on petitioner whom it
found doing business in the Philippines and Trans-World 5. Alleging compliance with conditions precedent
as its agent
- CA affirmed RTC: summons properly served Rule 8 Section 3
- Before the SC, French Oil contends that it is not doing Conditions precedent. — In any pleading a general
business in the Philippines and that Trans-World is not its averment of the performance or occurrence of all
agent, and thus, the summons served on the latter has no conditions precedent shall be sufficient. (3)
effect on the former
HELD: CA affirmed Rule 16 Section 16 (J)
- It is not enough to merely allege in the complaint that a Grounds. — Within the time for but before filing the
defendant foreign corporation is doing business. For answer to the complaint or pleading asserting a claim,
purposes of the rule on summons, the fact of doing a motion to dismiss may be made on any of the
business must first be “established by appropriate following grounds:
allegations in the complaint” and the court in determining
such fact need not go beyond the allegations therein (j) That a condition precedent for filing the claim
- ITC: the ff. allegations are sufficient that petitioner is doing has not been complied with. (1a)
business for purposes of Section 14, Rule 14
o allegations that petitioner entered into a contract Art. 151, Family Code.
with private respondent to supply and install “No suit between members of the same family shall
various machineries and equipments for the use prosper unless it should appear from the verified
of the latter’s oil mill factory complaint or petition that earnest efforts toward a
o that the first shipment of machineries from compromise have been made, but that the same have
petitioner was received by private respondent failed. It if is shown that no such efforts were in fact
- The determination that a foreign corporation is doing made, the case must be dismissed.”
business is merely tentative and only to enable the local
court to acquire jurisdiction over the person of the foreign
corporation through service of summons. It does not Section 408 LGC
Subject Matter for Amicable Settlement; Exception designated representative, whose ruling thereon shall
Thereto. - The lupon of each barangay shall have be binding.
authority to bring together the parties actually residing
in the same city or municipality for amicable Article 2035 NCC
settlement of all disputes except: No compromise upon the following questions shall be
valid:
(a) Where one party is the government, or any (1) The civil status of persons;
subdivision or instrumentality thereof; (2) The validity of a marriage or a legal separation;
(3) Any ground for legal separation;
(b) Where one party is a public officer or employee, (4) Future support;
and the dispute relates to the performance of his (5) The jurisdiction of courts;
official functions; (6) Future legitime.

(c) Offenses punishable by imprisonment exceeding Heirs of Favis v Gonzales


one (1) year or a fine exceeding Five thousand pesos
(P5,000.00); FACTS: Dr. Mariano Favis, Sr. (Dr. Favis) was married to
Capitolina Aguilar (Capitolina) with whom he had seven
(d) Offenses where there is no private offended party; children. When Capitolina died in March 1994. Dr. Favis
married Juana Gonzalez (Juana), his common-law wife with
(e) Where the dispute involves real properties located whom he sired one child, Mariano G. Favis (Mariano), he
in different cities or municipalities unless the parties executed an affidavit acknowledging Mariano as one of his
thereto agree to submit their differences to amicable legitimate children. Mariano is married to Larcelita D. Favis
settlement by an appropriate lupon; (Larcelita), with whom he has four children.

(f) Disputes involving parties who actually reside in Dr. Favis died intestate on July 29, 1995. On October 16, 1994,
barangays of different cities or municipalities, except prior his death, he allegedly executed a Deed of Donation
where such barangay units adjoin each other and the transferring and conveying properties in favor of his
parties thereto agree to submit their differences to grandchildren with Juana. Claiming the said donation
amicable settlement by an appropriate lupon; prejudiced their legitime, Dr. Favis children with Capitolina,
petitioners herein, filed an action for annulment of the Deed of
(g) Such other classes of disputes which the Donation, inventory, liquidation, liquidation and partition of
President may determine in the interest of Justice or property before the RTC against Juana, Sps. Mariano and
upon the recommendation of the Secretary of Justice. Larcelita and their grandchildren as respondents.

The court in which non-criminal cases not falling RTC nullified the Deed of Donation. The trial court found that
within the authority of the lupon under this Code are Dr. Favis, at the age of 92 and plagued with illnesses, could
filed may, at any time before trial motu propio refer not have had full control of his mental capacities to execute a
the case to the lupon concerned for amicable valid Deed of Donation.
settlement.
The Court of Appeals ordered the dismissal of the petitioners
Section 409 LGC nullification case. The CA motu proprioproprio ordered the
Venue. - dismissal of the complaint for failure of petitioners to make an
averment that earnest efforts toward a compromise have been
(a) Disputes between persons actually residing in the made, as mandated by Article 151 of the Family Court.
same barangay shall be brought for amicable
settlement before the lupon of said barangay.

(b) Those involving actual residents of different ISSUE:


barangays within the same city or municipality shall
be brought in the barangay where the respondent or May the appellate court dismiss the order of dismissal of the
any of the respondents actually resides, at the complaint for failure to allege therein that earnest efforts
election of the complaint. towards a compromise have been made?

(c) All disputes involving real property or any interest HELD: The appellate court committed egregious error in
therein shall be brought in the barangay where the dismissing the complaint.
real property or the larger portion thereof is situated.
The appellate court committed egregious error in dismissing
(d) Those arising at the workplace where the the complaint. The appellate courts decision hinged on Article
contending parties are employed or at the institution 151 of the Family Code, Art.151.No suit between members of
where such parties are enrolled for study, shall be the same family shall prosper unless it should appear from the
brought in the barangay where such workplace or verified complaint or petition that earnest efforts toward a
institution is located. compromise have been made, but that the same have failed. If
it is shown that no such efforts were in fact made, the case
Objections to venue shall be raised in the mediation must be dismissed.
proceedings before the punong barangay; otherwise,
the same shall be deemed waived. Any legal question The appellate court correlated this provision with Section 1, par.
which may confront the punong barangay in resolving (j), Rule 16 of the 1997 Rules of Civil Procedure, which
objections to venue herein referred to may be provides: Section 1. Grounds. - Within the time for but before
submitted to the Secretary of Justice, or his duly filing the answer to the complaint or pleading asserting a claim,
a motion to dismiss may be made on any of the following In 1967, Pedro Gayon is the brother of Silvestre Gayon whose
grounds:(j) That a condition precedent for filing the claim has wife is Genoveva Gayon. Pedro filed a case against against
not been complied with. Silvetre and Genoveva for consolidation of ownership.
Genoveva alleged that her husband, Silvestre, died long
The appellate courts reliance on this provision is misplaced. before the institution of this case. She prayed that for the
Rule 16 treats of the grounds for a motion to dismiss the dismissal of the case because Pedro, being a brother of the
complaint. It must be distinguished from the grounds provided deceased Silvestre, "did not exert efforts for the amicable
under Section 1, Rule 9 which specifically deals with dismissal settlement of the case" before filing his complaint.
of the claim by the court motu proprio. Section 1, Rule 9 of the
1997 Rules of Civil Procedure. Section 1, Rule 9 provides for Issue:
only four instances when the court may motu proprio dismiss
the claim, namely: (a) lack of jurisdiction over the subject Is there a need for an earnest effort toward a compromise in
matter; (b) litis pendentia; (c) res judicata; and (d) prescription this case?
of action.
Held:
It was in Heirs of Domingo Valientes v. Ramas cited in P.L. Uy
Realty Corporation v. ALS Management and Development Art. 222 of the Civil Code provides:
Corporation where we noted that the second sentence of
Section 1 of Rule 9 does not only supply exceptions to the rule No suit shall be filed or maintained between members of the
that defenses not pleaded either in a motion to dismiss or in same family unless it should appear that earnest efforts toward
the answer are deemed waived, it also allows courts to dismiss a compromise have been made, but that the same have failed,
cases motu proprio on any of the enumerated grounds. The subject to the limitations in article 2035.
tenor of the second sentence of the Rule is that the allowance
of a motu propio dismissal can proceed only from the This phrase, "members of the same family," should, however,
exemption from the rule on waiver; which is but logical be construed in the light of Art. 217 of the same Code,
because there can be no ruling on a waived ground. pursuant to which:

Family relations shall include those:

A failure to allege earnest but failed efforts at a compromise in (1) Between husband and wife;
a complaint among members of the same family, is not a
jurisdictional defect but merely a defect in the statement of a (2) Between parent and child;
cause of action.
(3) Among other ascendants and their descendants;
In the case at hand, the proceedings before the trial court ran
the full course. The complaint of petitioners was answered by (4) Among brothers and sisters.
respondents without a prior motion to dismiss having been filed.
The decision in favor of the petitioners was appealed by Genoveva is plaintiff's sister-in-law. "Sisters-in-law" are not
respondents on the basis of the alleged error in the ruling on listed under Art. 217 of the New Civil Code as members of the
the merits, no mention having been made about any defect in same family. Hence, the case does not come within the
the statement of a cause of action. In other words, no motion to purview of Art. 222, and plaintiff's failure to seek a compromise
dismiss the complaint based on the failure to comply with a before filing the complaint does not bar the same.
condition precedent was filed in the trial court; neither was
such failure assigned as error in the appeal that respondent Hontiveros v RTC
brought before the Court of Appeals.
SUMMARY: Sps Augusto and Maria Hontiveros filed a
Therefore, the rule on deemed waiver of the non-jurisdictional complaint for damages against Gregorio Hontiveros and
defense or objection is wholly applicable to respondent. If the Teodoro Ayson. Respondents claim that case states no cause
respondents as parties-defendants could not, and did not, after of action for failure to allege that earnest efforts towards a
filing their answer to petitioners complaint, invoke the objection compromise had been made, considering that plaintiff Augusto
of absence of the required allegation on earnest efforts at a and respondent Gregorio are brothers. Plaintiffs filed an
compromise, the appellate court unquestionably did not have Amended Complaint with the said allegation, which was denied
any authority or basis to motu propio order the dismissal of by respondents. RTC ruled that failure to verify as to the
petitioners complaint. earnest efforts made and the failure of the same, as required
under Art 151 of the Family Code, is ground for dismissal of
The correctness of the finding was not touched by the Court of case. Court held that failure to comply with Art. 151 is not a
Appeals. The respondents opted to rely only on what the jurisdictional defect. What the Court should have done is to
appellate court considered, erroneously though, was a order plaintiffs to verify it, and not to dismiss. Also, Art. 151
procedural infirmity. The trial court's factual finding, therefore, does not apply because of the inclusion of “strangers” namely,
stands unreversed; and respondents did not provide us with Maria Hontiveros and Teodora Ayson, which takes it out of the
any argument to have it reversed. ambit of Art. 151.

The decision of the Court of Appeals is reversed and set aside FACTS:
and the Judgment of the Regional Trial Court is AFFIRMED.
• Sps Augusto and Maria Hontiveros filed a complaint for
Gayon v Gayon damages against Gregorio Hontiveros and Teodora Ayson.
Augusto and Gregorio, both surnamed Hontiveros, were
Facts: brothers.
• Plaintiffs alleged that they are the owners of land in Capiz, which are alleged are true and correct. If the court doubted the
pursuant to a decision by the IAC in a land registration case veracity of the allegations regarding efforts made to settle the
filed by Gregorio. They claim have been deprived of income case among members of the same family, it could simply have
from the land as a result of the filing of the case, consisting of ordered petitioners to verify them.
rentals from tenants, and that they were in bad faith.
• Otherwise, mere suspicion or doubt on the part of the trial
• Gregorio and Ayson prayed for dismissal of the case. As court as to the truth of the allegation that earnest efforts had
counterclaim, they claimed damages and reconveyance of the been made toward a compromise but the parties' efforts
land. proved unsuccessful is not a ground for the dismissal of an
action. Only if it is later shown that such efforts had not really
o They denied that they were married. Gregorio claimed to be been exerted would the court be justified in dismissing the
a widower, while Ayson single. Denied that they deprived action.
petitioners of possession and that property had already been
returned by virtue of writ of possession. They also claimed that • Moreover, as petitioners contend, Art. 151 of the Family Code
complaint failed to state a cause of action since it did not allege does not apply in this case since the suit is not exclusively
that earnest efforts towards a compromise had been made, among family members. The inclusion of private respondent
considering that Augusto and Gregorio were brothers. Ayson Ayson as defendant and petitioner Maria Hontiveros as plaintiff
claimed that she had nothing to do with the case as she was takes the case out of the ambit of Art. 151 of the Family Code.
not even married to Gregorio and did not have any proprietary
interest in the property. Under this provision, the phrase "members of the same family"
refers to the husband and wife, parents and children,
• Petitioners filed an Amended Complaint to insert therein an ascendants and descendants, and brothers and sisters,
allegation that “earnest efforts towards a compromise have whether full or half-blood.
been made between the parties but the same were
unsuccessful.” • Religious relationship and relationship by affinity are not
given any legal effect in this jurisdiction. Consequently, private
o Private respondents filed Answer to Amended Complaint w/ respondent Ayson, who is described in the complaint as the
Counterclaim in which they denied that earnest efforts have spouse of respondent Hontiveros, and petitioner Maria
been made to reach a compromise but were unsuccessful. Hontiveros, who is admittedly the spouse of petitioner Augusto
Hontiveros, are considered strangers to the Hontiveros family,
• Petitioners moved for a judgment on the pleadings on the for purposes of Art. 151.
ground that private respondents’ answer did not tender an
issue or that it otherwise admitted the material allegations of ISSUE: WoN Art 151 is unconstitutional? Not proper case to
the complaint. decide this issue because it’s not lis mota.

o Private respondents opposed motion alleging that they had • Petitioners finally question the constitutionality of Art. 151 of
denied the claims and thus tendered issues of fact to be the Family Code on the ground that it in effect amends the
resolved after trial. Rules of Court. This, according to them, cannot be done since
the Constitution reserves in favor of the Supreme Court the
• RTC denied Motion for Judgment on Pleadings, but power to promulgate rules of pleadings and procedure.
dismissed main case because it was not verified as required Considering the conclusion we have reached in this case,
under Art. 151 of the Family Code, and thus, it did not believe however, it is unnecessary for present purposes to pass upon
that earnest efforts had been made to arrive at a compromise. this question. Courts do not pass upon constitutional questions
unless they are the very lis mota of the case.
• Claiming that case involved pure questions of law, they
elevated case to SC. PETITION GRANTED. RTC DECISION SET ASIDE. CASE
REMANDED TO RTC FOR FURTHER PROCEEDINGS.
ISSUE: WoN judgment on the pleadings may be had? NO.
6. Striking out
HELD: Under the rules, if there is no controverted matter in the
case after the answer is filed, the trial court has the discretion Section 12, Rule 8
to grant a motion for judgment on the pleadings filed by a Party. Striking out of pleading or matter contained therein. — Upon
Where there are actual issues raised in the answer, such as motion made by a party before responding to a pleading or, if
one involving damages, which require the presentation of no responsive pleading is permitted by these Rules, upon
evidence and assessment thereof by the trial court, it is motion made by a party within twenty (20) days after the
improper for the judge to render judgment based on the service of the pleading upon him, or upon the court's own
pleadings alone. In this case, aside from the amount of initiative at any time, the court may order any pleading to be
damages, the following factual issues have to be resolved, stricken out or that any sham or false, redundant, immaterial,
namely, (1) Teodora Ayson's participation and/or liability, if any, impertinent, or scandalous matter be stricken out therefrom.
to petitioners and (2) the nature, extent, and duration of private
respondents' possession of the subject property.
B. Answer
ISSUE: WoN case must be dismissed for failure to comply with
verification requirement under Art. 151, FC? NO. 1. General

HELD: The absence of the verification required in Art. 151 Section 4, Rule 6
does not affect the jurisdiction of the court over the subject Answer. — An answer is a pleading in which a
matter of the complaint. The verification is merely a formal defending party sets forth his defenses.
requirement intended to secure an assurance that matters
Section 1, Rule 11 Section 5, Rule 6
Answer to the complaint. — The defendant shall file Defenses. — Defenses may either be negative or
his answer to the complaint within fifteen (15) days affirmative.
after service of summons, unless a different period is
fixed by the court. (a) A negative defense is the specific denial of
Section 2, Rule 11 the material fact or facts alleged in the pleading of the
Answer of a defendant foreign private juridical entity. claimant essential to his cause or causes of action.
— Where the defendant is a foreign private juridical
entity and service of summons is made on the (b) An affirmative defense is an allegation of a
government official designated by law to receive the new matter which, while hypothetically admitting the
same, the answer shall be filed within thirty (30) days material allegations in the pleading of the claimant,
after receipt of summons by such entity would nevertheless prevent or bar recovery by him.
. The affirmative defenses include fraud, statute of
Section 11, Rule 11 limitations, release, payment, illegality, statute of
Extension of time to plead. — Upon motion and on frauds, estoppel, former recovery, discharge in
such terms as may be just, the court may extend the bankruptcy, and any other matter by way of
time to plead provided in these Rules. confession and avoidance. (5a)

Rule 22 Section 2, Rule 8


Alternative causes of action or defenses. — A party
Section 1. How to compute time. — In may set forth two or more statements of a claim or
computing any period of time prescribed or allowed by defense alternatively or hypothetically, either in one
these Rules, or by order of the court, or by any cause of action or defense or in separate causes of
applicable statute, the day of the act or event from action or defenses. When two or more statements are
which the designated period of time begins to run is to made in the alternative and one of them if made
be excluded and the date of performance included. If independently would be sufficient, the pleading is not
the last day of the period, as thus computed, falls on a made insufficient by the insufficiency of one or more
Saturday a Sunday, or a legal holiday in the place of the alternative statements.
where the court sits, the time shall not run until the
next working day. (a) Section 7, Rule 8
Action or defense based on document. — Whenever
Section 2. Effect of interruption. — Should an an action or defense is based upon a written
act be done which effectively interrupts the running of instrument or document, the substance of such
the period, the allowable period after such interruption instrument or document shall be set forth in the
shall start to run on the day after notice of the pleading, and the original or a copy thereof shall be
cessation of the cause thereof. attached to the pleading as an exhibit, which shall be
deemed to be a part of the pleading, or said copy may
The day of the act that caused the interruption shall with like effect be set forth in the pleading.
be excluded in the computation of the period. (n)
Section 8, Rule 8
How to contest such documents. — When an action
Section 11, RSC or defense is founded upon a written instrument,
Response - The defendant shall file with the court and copied in or attached to the corresponding pleading
serve on the plaintiff a duly accomplished and verified as provided in the preceding section, the genuineness
Response within a non - extendible period of ten (10) and due execution of the instrument shall be deemed
days from receipt of summons. The Response shall admitted unless the adverse party, under oath
be accompanied by certified photocopies of specifically denies them, and sets forth what he
documents, as well as affidavits of witnesses and claims to be the facts, but the requirement of an oath
other evidence in support thereof. No evidence shall does not apply when the adverse party does not
be allowed during the hearing which was not attached appear to be a party to the instrument or when
to or submitted together with the Response, unless compliance with an order for an inspection of the
good cause is shown for the admission of additional original instrument is refused.
evidence.
Section 10, Rule 8
Section 5, RSP Specific denial. — A defendant must specify each
Answer. — Within ten (10) days from service of material allegation of fact the truth of which he does
summons, the defendant shall file his answer to the not admit and, whenever practicable, shall set forth
complaint and serve a copy thereof on the plaintiff. the substance of the matters upon which he relies to
Affirmative and negative defenses not pleaded therein support his denial. Where a defendant desires to deny
shall be deemed waived, except for lack of jurisdiction only a part of an averment, he shall specify so much
over the subject matter. Cross-claims and compulsory of it as is true and material and shall deny only the
counterclaims not asserted in the answer shall be remainder. Where a defendant is without knowledge
considered barred. The answer to counterclaims or or information sufficient to form a belief as to the truth
cross-claims shall be filed and served within ten (10) of a material averment made to the complaint, he
days from service of the answer in which they are shall so state, and this shall have the effect of a
pleaded.chanroble denial.

Section 11, Rule 8


2. Alleging defenses Allegations not specifically denied deemed admitted.
— Material averment in the complaint, other than assuming arguendo it is valid and legal, in failing to conclude
those as to the amount of unliquidated damages, shall that petitioners substantially complied.
be deemed admitted when not specifically denied.
Allegations of usury in a complaint to recover usurious WON it was error for the CA to reverse the appealed decision
interest are deemed admitted if not denied under on the ground of prescription when SLI failed to offer the bills
oath. of lading in evidence –NO

Section 1, Rule 9 *The bills of lading were said to contain shortened periods for
Defenses and objections not pleaded. — Defenses filing a claim and instituting a court action against the carrier.
and objections not pleaded either in a motion to The claims must have been made at the time of delivery to
dismiss or in the answer are deemed waived. consignee or agent, if container shows exterior signs of
However, when it appears from the pleadings or the damage or shortage.
evidence on record that the court has no jurisdiction
over the subject matter, that there is another action -CA: although the bills of lading were not offered in evidence,
pending between the same parties for the same the litigation obviously revolves on such bills of lading which
cause, or that the action is barred by a prior judgment are practically the documents or contracts sued upon, hence,
or by statute of limitations, the court shall dismiss the they are inevitably involved and their provisions cannot be
claim. disregarded in the determination of the relative rights of the
parties thereto.
Section 6, Rule 16
Pleading grounds as affirmative defenses. — If no -SC:
motion to dismiss has been filed, any of the grounds
for dismissal provided for in this Rule may be pleaded • Prescription as an affirmative defense was seasonably raised
as an affirmative defense in the answer and, in the EXCEPT the bills of lading were not formally offered in
discretion of the court, a preliminary hearing may be evidence. The issue now is whether or not prescription can be
had thereon as if a motion to dismiss had been filed. maintained as such a defense and constantly upheld on the
(5a) strength of mere references thereto.

The dismissal of the complaint under this section shall • Because petitioners are suing upon SLI’s contractual
be without prejudice to the prosecution in the same or obligation under the contract of carriage, the bills of lading can
separate action of a counterclaim pleaded in the be categorized as ACTIONABLE DOCUMENTS. Under the
answer. rules, they must be properly pleaded either as causes of action
or defenses, and the genuineness and due execution of which
are deemed admitted unless specifically denied under oath by
Phil American General Insurance v Sweet Lines the adverse party.

SUMMARY: A suit for recovery between Philamgen/TPI and • Petitioner failed to specifically deny the existence, much less
SLI/DVAPSI was dismissed on the ground of prescription. The the genuineness and due execution, of the written instruments
bills of lading contained a paragraph providing for shortened in question. This amounts to an admission. JUDICIAL
periods to file claims, BUT they were never presented in ADMISSIONS, verbal or written, made by the parties in the
evidence. Prescription was raised as an affirmative defense by pleadings or in the course of the trial or other proceedings in
SLI, but Philamgen/TPI failed to specifically deny the existence, the same case, are conclusive. Instrument need not be
much less the genuineness and due execution, of the written presented formally because it is considered an admitted fact.
instruments in question. This amounts to an admission.
JUDICIAL ADMISSIONS, verbal or written, made by the • Petitioners failed to touch on the matter of the non-
parties in the pleadings or in the course of the trial or other presentation of the bills of lading in their brief and earlier on in
proceedings in the same case, are conclusive. Instrument the appellate proceedings in this case, hence it is too late in
need not be presented formally because it is considered an the day to now allow the litigation to be overturned on that
admitted fact. While Petitioners objected to the validity of the score, for to do so would mean an over indulgence in
agreement in the bills of lading, the existence of such were technicalities.
impliedly admitted.
• The non-inclusion of the controverted bills of lading in the
FACTS: formal offer of evidence cannot, under the facts of this
particular case, be considered a fatal procedural lapse as
• Petitioners Philamgen and TPI filed a maritime suit against would bar respondent carrier from raising the defense of
SLI and DVAPSI for the recovery of the cost of lost or prescription.
damaged shipment only 5820 bags from 2 consignments
consisting of around 7000 bags of Low Density Polyethylene • The carriage of the cargo involved was effected pursuant to
arrived in good condition. an "Application for Delivery of Cargoes without Original Bill of
Lading" issued on May 20, 1977 in Davao City with the
• Before trial, a compromise agreement was entered and the notation therein that said application corresponds to and is
trial court granted a motion to dismiss on the ground of the said subject to the terms of bills of lading. It would be a safe
amicable settlement. assessment to interpret this to mean that, sight unseen,
petitioners acknowledged the existence of said bills of lading.
• On appeal, CA reversed on the ground of prescription. By having the cargo shipped on respondent carrier’s vessel
and later making a claim for loss on the basis of the bills of
• Petitioners filed a petition for review on certiorari, faulting CA lading, petitioners for all intents and purposes accepted said
for the following: 1) upholding the existence of a prescriptive bills. Having done so they are bound by all stipulations
period; 2) granting that it exists, in not finding it null and voidl 3) contained therein. As petitioners are suing for recovery on the
contract, and in fact even went as far as assailing its validity by period within which to bring action for breach of contract is
categorizing it as a contract of adhesion, then they necessarily valid and binding.
admit that there is such a contract, their knowledge of the
existence of which with its attendant stipulations they cannot • The report on losses and damages is not the claim referred to
now be allowed to deny. and required by the bills of lading for it does not fix
responsibility for the loss or damage, but merely states the
• While Petitioners objected to the validity of the agreement in condition of the goods shipped. The claim contemplated herein,
the bills of lading, the existence of such were impliedly in whatever form, must be something more than a notice that
admitted. the goods have been lost or damaged; it must contain a claim
for compensation or indicate an intent to claim.
WON the shortened periods in par 5 of the Bill of Lading (30
days for filing a claim with the carrier in case of loss of or • Unlike a common carrier, an arrastre operator does not labor
damage to the cargo and 60 days from accrual of the right of under a presumption of negligence in case of loss, destruction,
action for instituting an action in court) is valid -YES or deterioration of goods discharged into its custody. In other
words, to hold an arrastre operator liable for loss of and/or
• The fundamental reason or purpose of such a stipulation is damage to goods entrusted to it there must be preponderant
not to relieve the carrier from just liability, but reasonably to evidence that it did not exercise due diligence in the handling
inform it that the shipment has been damaged and that it is and care of the goods.
charged with liability therefor, and to give it an opportunity to
examine the nature and extent of the injury. This protects the • What can only be inferred from the factual findings of the trial
carrier by affording it an opportunity to make an investigation of court is that by the time the cargo was discharged to DVAPSI,
a claim while the matter is fresh and easily investigated so as loss or damage had already occurred and that the same could
to safeguard itself from false and fraudulent claims. not have possibly occurred while the same was in the custody
of DVAPSI, as demonstrated by the observations of the trial
• In the absence of any statutory limitation and subject only to court quoted at the start of this opinion.
the requirement on the reasonableness of the stipulated
limitation period, the parties to a contract of carriage may fix by Spouses Abrajano v Heirs of Salas
agreement a shorter time for the bringing of suit on a claim for
the loss of or damage to the shipment than that provided by
the statute of limitations. Such limitation is not contrary to
public policy for it does not in any way defeat the complete
vestiture of the right to recover, but merely requires the
assertion of that right by action at an earlier period than would Associated Bank v Spouses Montano
be necessary to defeat it through the operation of the ordinary
statute of limitations. FACTS: Spouses Justiniano and Ligaya Montano (the
Montanos) owned three (3) parcels of land situated in Cavite.
• While petitioners may possibly have a cause of action, for Justiniano was then serving as congressman for the lone
failure to comply with the above condition precedent they lost district of Cavite and as minority floor leader. When the country
whatever right of action they may have in their favor or, taken was under martial law, Justiniano went to the United States of
in another sense, that remedial right or right to relief had America (USA) to avoid the harassment and threats made
prescribed. against him by the dictator. While still in the USA, the
Montanos transferred the said properties to Tres Cruces Agro-
• The shipment in question was discharged into the custody of Industrial Corporation (TCAIC) in exchange for shares of stock
the consignee on May 15, 1977, and it was from this date that in the company, allowing the Montanos to control 98% of the
petitioners’ cause of action accrued, with thirty (30) days stockholdings of TCAIC. Thus, on the certificates of title
therefrom within which to file a claim with the carrier for any registered in the name of the Montanos were cancelled and
loss or damage which may have been suffered by the cargo were replaced with transfer certificates of title (TCTs) in TCAIC
and thereby perfect their right of action. The claim was filed s name. A year later, TCAIC sold the properties to International
with SLI only on April 28, 1978, way beyond the period Country Club, Inc. (ICCI) for P6,000,000.00. The sale resulted
provided in the bills of lading. in the cancellation of the titles of TCAIC, and in their transfer to
ICCI. ICCI immediately mortgaged the parcels of land to
• TPI filed a provisional claim with DVAPSI as early as June 14, Citizens Bank and Trust Co. (later renamed as Associated
1977 and, as found by the trial court, a survey fixing the extent Bank) for P2,000,000.00.The loan matured but remained
of loss of and/or damage to the cargo was conducted on July 8, unpaid, prompting Associated Bank to foreclose the mortgage.
1977 at the instance of petitioners. If petitioners had the The properties were then put on public auction and were sold
opportunity and awareness to file such provisional claim and to for P5,700,000.00 to Associated Bank, the sole and highest
cause a survey to be conducted soon after the discharge of the bidder. Ownership over the said properties was consolidated
cargo, then they could very easily have filed the necessary by Associated Bank and, new TCTs were issued in its name.
formal, or even a provisional, claim with SLI itself within the Montanos returned to the country. After discovering the
stipulated period therefor, instead of doing so only on April 28, transfer of the properties, the Montanos immediately took
1978 despite the vessel's arrival at the port of destination on physical possession of the same and began cultivating the land.
May 15, 1977. Petitioners slept on their rights and they must Montanos filed an action for reconveyance of title against
now face the consequences of such inaction. herein petitioner, praying, in sum, that the transfer of the
properties from TCAIC to ICCI, and from ICCI to Associated
• There is no constitutional or statutory prohibition infirming Bank, be declared null and void.
paragraph 5 of subject Bill of Lading. The stipulated period of
60 days is reasonable enough for appellees to ascertain the ISSUES: 1. Whether it is proper to file a motion to dismiss after
facts and thereafter to sue, if need be, and the 60-day period an answer has already been filed;
agreed upon by the parties which shortened the statutory
2. Whether the complaint should be dismissed on the grounds herein private respondents for recovery of hereditary rights.
set forth therein. How Juanito Camacho, who was entitled to only a total area of
931 square meters, nor, how one Dalmacio Ramos, Jr.,
HELD: acquired ¼ share of the property was allegedly not known to
them.
1. On the propriety of the motion to dismiss It is, therefore,
inconsequential that petitioner had already filed an answer to In their answer, the defendants-respondents alleged that the
the complaint prior to its filing of a motion to dismiss. The shares of plaintiffs-petitioners had likewise been sold to
option of whether to set the case for preliminary hearing after DionisioToribio, their brother, who, in turn, sold the same to
the filing of an answer which raises affirmative defenses, or to Juanito Camacho and Dalmacio Ramos. The alleged sale from
file a motion to dismiss raising any of the grounds set forth in petitioners to Dionisio and the sale from Dionisio to the
Section 1, Rule 16 of the Rules are procedural options which respondents were evidenced by deeds of sale, xerox copies of
are not mutually exclusive of each other. Moreover, as which were appended to and made an integral part of the
petitioner correctly pointed out, respondents failed to oppose respondents' partition agreement between the respondents
the motion to dismiss despite having been given the and also a xerox copy of the respondents' transfer certificates
opportunity to do so by the RTC. Therefore, any right to of title.
contest the same was already waived by them.
While testifying during the trial, EusebiaToribio was asked
2. On whether the complaint for reconveyance should be whether she executed any sale of her share in the parcel of
dismissed In their complaint for reconveyance, respondents land in litigation. The counsel for private respondents objected,
alleged that the transfer of the three parcels of land from raising the proper mode of contesting the genuineness of an
TCAIC to ICCI was facilitated through threat, duress and actionable document pursuant to Sections 7 and 8, Rule 8 of
intimidation employed by certain individuals. On its face, the the Revised Rules of Court. The trial court sustained the
complaint clearly states a cause of action and raises issues of objection.
fact that can be properly settled only after a full-blown trial. On
this ground, petitioner s motion to dismiss must, perforce, be Petitioners, thereupon, filed a constancia with a motion for
denied. However, the RTC s ruling that the action has already reconsideration stating that the documents submitted by the
prescribed was not correct. The RTC, however, seemed to respondents were merely evidentiary in nature, not a cause of
have overlooked the fact that the basis of respondents action or defense, the due execution and genuineness of which
complaint for reconveyance is not fraud but threat, duress and they had to prove. They alleged that the subject of litigation
intimidation, allegedly employed by Marcos cronies upon the was the hereditary shares of plaintiffs-petitioners, not any
relatives of the Montanos while the latter were on selfexile. In document. They stated that the defense consisting mainly of
fact, fraud was neither specifically alleged nor remotely implied transfer certificates of titles in the respondents' names
in the complaint. The four-year prescriptive period must, be originating from the sale from petitioners to Dionisio and from
reckoned from the said date. Thus, when respondents filed the latter to the respondents were merely evidentiary in nature.
their complaint for reconveyance on September 15, 1989, the They argued that a simple specific denial without oath is
period provided for by law had not yet prescribed. Therefore, sufficient. The court denied the motion for reconsideration. The
petitioner s motion to dismiss should be denied. documents attached to the respondents' answer and made an
integral part thereof were declared to be the very foundation or
Sun Bros v Caluntad basis of the respondents' defense and not merely evidentiary in
nature. Hence, this petition for review on certiorari.

Issue:

Whether or not the deeds of sale allegedly executed by the


Toribio v Bidin petitioners in favor of their brother DionisioToribio and
appended to the respondents' answer are merely evidentiary in
Facts: Engracio Francisco and Juliana Esteban were the nature or the very foundation of their defense which must be
registered owners of the parcel of land Zamboanga. At the denied under oath by the petitioner.
death of said spouses, they were survived by their ten (10)
children who inherited their state in equal pro indiviso shares. Held: It is clear that the respondents anchor their defense on
Subsequently, the property was subdivided among the heirs the deeds of sale by virtue of which the hereditary rights of all
and a portion designated as Lot No. 1943-B was allotted to the the petitioners over Lot 1943-B were sold, transferred, and
Justa Francisco. Justa died and was survived among by eight conveyed in favor of their brother, DionisioToribio, who in turn
(8) children namely: Dionoso, Eufremia, Alfonso, Rafael, sold the same to herein respondents. The deed of sale
Petrona, Olegario, Segundino and Eusebia, all surnamed executed by the petitioners in favor of their brother Dionisio is
Toribio, who eight heirs, Eufremia, Alfonso and Petrona, sold an essential and indispensable part of their defense to the
their in the property to Ramon Ledesma. Rafael also sold his allegation that the petitioners had never disposed of their
share to Dinisio who, in turn, sold the same to Ramon property.
Ledesma. Thus, the latter acquired four (4) shares out of eight
(8) shares, or a ½ pro indiviso share of Lot 1943-B. The proper procedure was for the petitioners to specifically
deny under oath the genuineness and due execution of the
Subsequently, Dionisio sold his own hereditary share in the questioned deeds of sale and to set forth what they claim to be
aforesaid estate of his mother to Juanito Camacho, who by the facts. However, the oversight or negligence of petitioners'
said sale acquired a 1/8 pro indiviso share of the property. counsel in not properly drafting a reply to the answer and an
answer to the counter claim is not necessarily fatal to their
The three other heirs, petitioners SegundinoEusebia and cause.
Olegario alleging that their shares had never been sold nor in
any wise transferred or disposed to others filed a case against The complaint was verified under oath by the petitioners.
The petitioners' counsel was obviously lulled into complacency shall not be less than five (5) days in any event. (1[b]a)
by two factors. First, the plaintiffs, now petitioners, had already
stated under oath that they never sold, transferred, or disposed Section 6. Bill a part of pleading. — A bill of particulars
of their shares in the inheritance to others. Second, the usual becomes part of the pleading for which it is intended. (1[a]a)
procedure is for a defendant to specifically deny under oath the
genuineness and due execution of documents set forth in and
annexed to the complaint. Somehow, it skipped counsel's Tantuico v Republic
attention that the rule refers to either an action or a defense
based upon a written instrument or document. It applies to both SUMMARY: The Sandiganbayan denied Francisco Tantuico’s
plaintiffs and defendants. motion for a bill of particulars on the ground that the particulars
were evidentiary in nature. The SC ruled that the allegations in
Under the facts of this case, the private respondents were the complaint pertaining are deficient in that they merely
placed on adequate notice by Paragraph 11 of the verified articulate conclusions of law and presumptions unsupported by
complaint that they would be caned upon during trial to prove factual premises. A complaint must inform the defendant
the genuineness or due execution of the disputed deeds of clearly and definitely of the claims made against him, thus the
sale. motion for a bill of particulars was granted.

Moreover, the heirs of OlegarioToribio, his widow and minor FACTS


children represented by their mother, are among the plaintiffs-
petitioners. They are not parties to the deeds of sale allegedly - Francisco Tantuico, Jr., Chairman of the Commission on
executed by their father, aunt, and uncle. They are not required Audit, was included as defendant in the case filed with the
to deny the deeds of sale under oath. The private respondents Sandiganbayan against Kokoy Romualdez and Ferdinand
will still have to introduce evidence to establish that the deeds Imelda Marcos for reconveyance, reversion, accounting,
of sale are genuine and that they were truly executed by the restitution, and damages.
parties with authority to dispose of the disputed property.
- Tantuico filed for a Motion for Bill of Particulars claiming that it
WHEREFORE, the order of the respondent court dated July 20, is necessary that he be furnished the particulars sought so that
1981 is hereby REVERSED and SET ASIDE. The Regional he can intelligently prepare his responsive pleading and
Trial Court which took over the cases of the respondent court prepare for trial
is ordered to receive the petitioners' evidence regarding the
genuineness and due execution of the disputed deeds of sale. - Sandiganbayan denied the motion for a bill of particulars on
the ground that the particulars sought are evidentiary in nature.
3. Bill of particulars MR was also denied.

Rule 12 ISSUE
Section 1. When applied for; purpose. — Before
responding to a pleading, a party may move for a definite WON the Sandiganbayan acted with grave abuse of discretion
statement or for a bill of particulars of any matter which is not in issuing the resolutions denying the motion for a bill of
averted with sufficient definiteness or particularity to enable particulars - YES
him properly to prepare his responsive pleading. If the pleading
is a reply, the motion must be filed within ten (10) days from RATIO
service thereof. Such motion shall point out the defects
complained of, the paragraphs wherein they are contained, - Complaint - a concise statement of the ultimate facts
and the details desired. (1a) constituting the plaintiff’s cause or causes of action

Section 2. Action by the court. — Upon the filing of the - The complaint shall contain in a methodical and logical form a
motion, the clerk of court must immediately bring it to the plain, concise and direct statement of the ultimate facts on
attention of the court which may either deny or grant it outright, which the plaintiff relies for his claim, omitting the statement of
or allow the parties the opportunity to be heard. (n) mere evidentiary facts

Section 3. Compliance with order. — If the motion is - Office, purpose, or function is to inform the defendant clearly
granted, either in whole or in part, the compliance therewith and definitely of the claims made against him so that he may
must be effected within ten (10) days from notice of the order, be prepared to meet the issues at the trial
unless a different period is fixed by the court. The bill of
particulars or a more definite statement ordered by the court - Rules on pleading speak of two kinds of facts
may be filed either in a separate or in an amended pleading,
serving a copy thereof on the adverse party. (n) - Ultimate facts - the essential facts constituting the plaintiff’s
cause of action. A fact is essential if it cannot be stricken out
Section 4. Effect of non-compliance. — If the order is without leaving the statement of the cause of action insufficient.
not obeyed, or in case of insufficient compliance therewith, the
court may order the striking out of the pleading or the portions - Evidentiary facts - those facts which are necessary for
thereof to which the order was directed or make such other determination of the ultimate facts; they are the premises upon
order as it deems just. (1[c]a) which conclusions of ultimate facts are based. Facts which
furnish evidence of existence of some other fact.
Section 5. Stay of period to file responsive pleading. —
After service of the bill of particulars or of a more definite - Where the allegations of the complaint are vague, indefinite,
pleading, or after notice of denial of his motion, the moving or in the form of conclusions, the proper recourse would be a
party may file his responsive pleading within the period to motion for a bill of particulars.
which he was entitled at the time of filing his motion, which
- The complaint alleges that "Defendant Ferdinand E. Marcos, within the time allowed therefor, the court shall, upon motion of
together with other Defendants, acting singly or collectively, the claiming party with notice to the defending party, and proof
and/or in unlawful concert with one another, in flagrant breach of such failure, declare the defending party in default.
of public trust and of their fiduciary obligations as public Thereupon, the court shall proceed to render judgment
officers, with gross and scandalous abuse of right and power granting the claimant such relief as his pleading may warrant,
and in brazen violation of the Constitution and laws of the unless the court in its discretion requires the claimant to submit
Philippines, embarked upon a systematic plan to accumulate evidence. Such reception of evidence may be delegated to the
ill-gotten wealth” clerk of court. (1a, R18)

- The allegations that defendant Marcos, together with the (a) Effect of order of default. — A party in default shall be
other defendants "embarked upon a systematic plan to entitled to notice of subsequent proceedings but not to take
accumulate ill-gotten wealth" and that they acted "in flagrant part in the trial. (2a, R18)
breach of public trust and of their fiduciary obligations as public
officers, with gross and scandalous abuse of right and in (b) Relief from order of default. — A party declared in
brazen violation of the Constitution and laws of the Philippines", default may at any time after notice thereof and before
are conclusions of law unsupported by factual premises. judgment file a motion under oath to set aside the order of
default upon proper showing that his failure to answer was due
- Nothing is said in the complaint about the acts in execution of to fraud, accident, mistake or excusable negligence and that
the alleged "systematic plan to accumulate ill-gotten wealth", or he has a meritorious defense. In such case, the order of
which are supposed to constitute "flagrant breach of public default may be set aside on such terms and conditions as the
trust", "gross and scandalous abuse of right and power", and judge may impose in the interest of justice. (3a, R18)
"violations of the Constitution and laws of the Philippines". The
complaint does not even allege what duties the petitioner failed (c) Effect of partial default. — When a pleading asserting
to perform, or the particular rights he abused. a claim states a common cause of action against several
defending parties, some of whom answer and the others fail to
- The complaint also alleged that Tantuico, taking undue do so, the court shall try the case against all upon the answers
advantage of his position as Chairman of the Commission on thus filed and render judgment upon the evidence presented.
Audit and with grave failure to perform his constitutional duties (4a, R18).
as such Chairman, acting in concert with Defendants
Ferdinand E. Marcos and Imelda R. Marcos facilitated and (d) Extent of relief to be awarded. — A judgment
made possible the withdrawals, disbursements and rendered against a party in default shall not exceed the amount
questionable use of government funds as stated in the or be different in kind from that prayed for nor award
foregoing paragraphs to the grave and irreparable damage and unliquidated damages. (5a, R18).
injury of Plaintiff and the entire Filipino people."
(e) Where no defaults allowed. — If the defending party
- The allegation that petitioner "took undue advantage of his in an action for annulment or declaration of nullity of marriage
position as Chairman of the Commission on Audit," that he or for legal separation fails to answer, the court shall order the
"failed to perform his constitutional duties as such Chairman," prosecuting attorney to investigate whether or not a collusion
and acting in concert with Ferdinand E. Marcos and Imelda R. between the parties exists, and if there is no collusion, to
Marcos, "facilitated and made possible the withdrawals, intervene for the State in order to see to it that the evidence
disbursements, and questionable use of government funds as submitted is not fabricated.
stated in the fore going paragraphs, to the grave and
irreparable damage and injury of plaintiff and the entire Filipino Section 3 Rule 67
people", are mere conclusions of law. - There was also an Defenses and objections. — If a defendant has no objection or
allegation that Tantuico acted as dummy, nominee, or agent by defense to the action or the taking of his property, he may file
allowing himself "to be used as instrument in accumulating ill- and serve a notice of appearance and a manifestation to that
gotten wealth through government concessions, orders and/or effect, specifically designating or identifying the property in
policies prejudicial to Plaintiff" or "to be (an) incorporator, which he claims to be interested, within the time stated in the
director, or member of corporations beneficially held and/or summons. Thereafter, he shall be entitled to notice of all
controlled" by the Marcoses and Romualdezes - Complaint proceedings affecting the same.
does not contain any allegation as to how petitioner became,
or why he is perceived to be, a dummy, nominee or agent and If a defendant has any objection to the filing of or the
is thus a conclusion of law without factual basis. allegations in the complaint, or any objection or defense to the
taking of his property, he shall serve his answer within the time
- The allegations in the complaint pertaining to Tantuico are stated in the summons. The answer shall specifically designate
deficient in that they merely articulate conclusions of law and or identify the property in which he claims to have an interest,
presumptions unsupported by factual premises. Hence, without state the nature and extent of the interest claimed, and adduce
the particulars prayed for in the motion for a bill of particulars, it all his objections and defenses to the taking of his property. No
can be said the Tantuico can not intelligently prepare his counterclaim, cross-claim or third-party complaint shall be
responsive pleading and for trial. alleged or allowed in the answer or any subsequent pleading.

- The Sandiganbayan acted with grave abuse of discretion A defendant waives all defenses and objections not so alleged
amounting to lack or excess of jurisdiction in promulgating the but the court, in the interest of justice, may permit amendments
questioned resolutions. to the answer to be made not later than ten (10) days from the
filing thereof. However, at the trial of the issue of just
4. Default compensation whether or not a defendant has previously
appeared or answered, he may present evidence as to the
Section 3 Rule 9 amount of the compensation to be paid for his property, and he
Default; declaration of. — If the defending party fails to answer may share in the distribution of the award.
• Philfinance was given extraordinary opportunity to have its
day in court when the lower court

Filinvest v CA had given it a total of eighty-eight (88) days from service of


summons to file its answer to the complaint. The inability of
SUMMARY: Filinvest filed a complaint for recovery of four (4) lawyers to prepare the answer for this long period of
possession against Philfinance. Philfinance, thru 4 different time is not justified.
lawyers, filed a total of six motions for extension to file an
Answer, on the basis of the counsel's inability to read the • Cited Pahilanga v. Luna: ... "but it is not error, or an abuse of
records because of too much work, heavy pressure of work, discretion, on the part of the court to refuse to set aside its
the unexpected wedding of one of the counsel, and illness of order of default and to refuse to accept the answer where it
counsel. The lower court granted the first 5 motions but denied finds no justifiable reason for the delay in the filing of the
the sixth. It declared Philfinance in default and rendered a answer."
judgment in favor of Filinvest. Philfinance petitioned that the
order of default be set aside and that his super late Answer be • On the merits of the case, Court agreed with lower court's
admitted. Court held that Philfinance was properly held in ruling. Philfinance's mere denials did not prevail over
default. The inability of 4 lawyers to file an Answer within the convincing evidence on record. Philfinance had no valid
88-day extension granted by the lower court was inexcusable. defense. Citing Pahilanga again, "nothing would be gained by
Besides, Philfinance, in its Answer, did not have a meritorious having the order of default set aside where the party held in
defense; thus, nothing would have been gained had the order default has no valid defense in his favor for in such case, he
of default been set aside. will just the same fail on the merits even if the default order is
lifted."
• 12 January 1984, 8:00 a.m.: Philfinance filed a 15-page
Answer with Counterclaim, denying Filinvest's claims and Reminders from the Court: This Court reiterates that it is
averring that Filinvest's title is null and void. concerned with the heavy caseloads of courts at all levels.
Most of the delays for which the justice system is assailed
• 25 January 1984: Philfinance filed a petition for: (1) the come from failure of counsel to cooperate with candor and will
admission of its Answer, (2) setting aside of the default order in the speedy resolution of cases. We have instituted
and the default judgment, and (3) leave to file its third-party continuous trial. We are revising the Rules of Court to make
complaint against third-party defendants. them responsive to current problems. We call judges to task
when their cases are not adjudicated with accuracy and
• Lower court denied Philfinance's petition. dispatch. The least we can do is sustain them when they come
across litigants like the private respondent in this case.
• Court of Appeals set aside the order of default.
Cavili v Florendo
LOWER COURT's ARGUMENT: Philfinance's counsel's
negligence to file the Answer for a period of 90 days is
inexcusable. Furthermore, Philfinance had no meritorious
defense to warrant a change of decision. Finally, the matter
alleged in the third-party complaint is foreign to the issues of
the subject case. Garcia v CA

CA's ARGUMENT: Philfinance was placed under receivership SUMMARY: Antonio Garcia filed an action for damages
making it difficult for its lawyers to have access to the records against Sps. Uy for padlocking stalls in Virra Mall. Sps. Uy
of the corporation. failed to file a reply within the reglementary period. TC
declared them in default. Garcia filed for motion for execution.
ISSUE: Whether the defendant, Philippine Underwriters TC granted and issued writ of execution. Sps. Uy challenged
Finance Corporation, was properly declared in default validity of writ of execution because it was granted without
notice to them or hearing. CA granted Uy’s petition for
HELD: Yes. Order of default is sustained. certiorari. SC held that a party in default is still entitled to
motion for execution pending appeal as default is not a waiver
The lower court granted the five (5) motions and denied the of all rights; only a waiver of right to present defense and
sixth motion before it declared Philfinance in default. All in all, examine (and corss examine witnesses). CA affirmed.
the lower court gave the Philfinance eighty-eight (88) days to
answer the complaint, so it can not be stated that the trial court FACTS:
has in any way unduly favored the Filinvest, neither can it be
considered that Philfinance has been denied due process. • Antonio Garcia filed an action for damages against Sps. Uy
for padlocking stalls in Virra Mall.
• Philfinance's counsel's having difficulty with the records of the
corporation is not only insufficient to explain six motions for • Sps. Uy failed to file a reply within the reglementary period.
postponement but was also belatedly raised. It was a mere
afterthought on the part of counsel when he raised such • TC declared them in default. Garcia filed for motion for
reason after they were already adjudged in default. (See: execution pending appeal.
grounds for motions for extension above).
• TC granted and issued writ of execution.
• The pattern of inexcusable neglect, if not deliberate delay is
all too clear. • Sps. Uy challenged validity of writ of execution because it
was granted without notice to them or hearing.
• CA granted Uy’s petition for certiorari and set aside TC’s the merits and is appealable. (See held for other remedies)
order to grant writ of execution.
FACTS:
• Garcia argues that notice to the adverse party becomes
mandatory only in case the defendant has NOT been declared - Passenger bus owned by Baliwag Transit, Inc. and driven by
in default. private respondent, Angeles Ramos, hit and bumped a van
owned by petitioner Francisco San Diego and driven by Alfredo
ISSUES: Santiago

W/N a party declared in default is entitled to notice of a motion - Petitioners instituted a civil complaint for damages against
for execution pending appeal of a judgment of default? – YES respondents before the RTC of Makati

HELD: - Summons and a copy of the complaint was served upon


private respondents’ cashier, Baby Cansino at respondents’
• Cited case: SC Johnson & Son v. CA bus

o A party declared in default is entitled to notice of the motion station in Caloocan City, who received the court process but
for execution pending appeal. refused to sign the original summons

o Without notice, the various recourses available to defaulted - TC, upon motion of petitioners, declared respondents in
party after judgment will be rendered illusory. default. Pursuant to this order, petitioners presented evidence
exparte
o Consistent with this right to notice of final order or judgment
is the right to notice of the motion for execution pending appeal - Respondents received a copy of the default order and it
of the default judgment. moved for reconsideration, alleging: TC did not acquire
jurisdiction over its person by reason of improper service of
• Remedies available: summons; Person who received the summons is only a cash
receiving clerk “who, unschooled with the law, and whose
o No judgment rendered yet: Motion to set aside order of position is not so integrated with the management circle of
default defendant corporation, did not fully appreciate the legal
significance and consequences of said document…”
o After judgment: Motion for New Trial, Petition for Relief from
Judgment, Appeal the Judgment, or special civil action for - Without ruling on respondents’ motion, TC rendered a
certiorari decision ordering respondents to pay repair cost of the van,
medical and hospitalization expenses, unearned income of the
• As being in default does not imply a waiver of rights, as passengers and the corporation (for non-use of the van), moral
aforesaid, the defaulted party has the right to expect damages, exemplary damages and attorney’s fees
compliance with the requisites for executing a judgment
pending appeal under Section 2 of Rule 39 - Without waiting for resolution of the MR, respondents
appealed to CA, arguing that they could not be held in default
Sec. 2. Execution pending appeal. – On motion of the due to improper service of summons
prevailing party with notice to the adverse party the court may,
in its discretion, order execution to issue even before the - CA: Annulled and set aside TC order of default and
expiration of the time to appeal, upon good reasons to be remanded case to TC for appropriate proceedings, since TC
stated in a special order. If a record on appeal is filed did not acquire jurisdiction over person of respondent
thereafter, the motion and the special order shall be included
therein. RESPONDENT’S ARGUMENT:

• A party in default only loses the right to present his defense - TC did not acquire jurisdiction over it due to improper service
and examine or cross-examine witnesses. It does not mean of summons: Baby Cansino was a mere “cash receiving clerk”
that being declared in default, and thereby losing one's and cannot be considered as an agent or representative of the
standing, constitutes a waiver of all rights corporation; Also, summons was served at a place other than
respondent’s principal place of business (served at one of the
• A party in default is still entitled to notice of final judgments respondents’ bus stations in Caloocan) - Basically,
and orders and proceeding respondents’ main argument was that it was not properly
notified of the action against it and so, it could not be held in
Talsan v Baliwag default

SUMMARY: Respondents were attesting that they should not ISSUES:


have been held in default since the TC did not acquire
jurisdiction over 1) WON there was valid service of summons upon
respondents – As to bus driver, NO; As to the corporation, YES
them due to improper service of summons. Court held that
there was proper service of summons as to respondent 2) WON appeal taken by respondents instead of motion for
corporation, new trial is the proper remedy – YES

Baliwag. It was also held that the appeal taken by respondents HELD:
was the proper remedy as a default judgment is an
adjudication on VALIDITY OF SERVICE OF SUMMONS UPON
RESPONDENTS
1) Service of summons upon Angeles Ramos (bus driver) was order of default on the ground that his failure to answer was
improper due to fraud, accident, mistake or excusable neglect, and that
he has a meritorious defense;
- In actions in personam, summons must be served by handing
a copy thereof to the defendant in person, or, if he refuses to b) If judgment has already been rendered when he discovered
receive it, by tendering it to him the default, but before the same has become final and
executory, he may file a motion for new trial under Section 1(a)
- If efforts to find defendant personally makes prompt service of Rule 37;
impossible, service may be effected by leaving copies of the
summons at the defendant’s dwelling house/residence with c) If he discovered the default after the judgment has become
person of suitable age and discretion residing therein, or by final and executory, he may file a petition for relief under
leaving copies at his office or regular place of business with Section 2 of Rule 38; and
competent person
d) He may also appeal from the judgment rendered against
- In this case, sheriff hastily effected service of summons by him as contrary to the evidence or to the law, even if no
substituted service without first attempting to personally serve petition to set aside the order of default has been presented by
the same upon the defendant him

- Lower court thus did not acquire jurisdiction over the person - Private respondents can appeal the judgment pursuant to
of Ramos; Judgment against him without effect Section 2(3), Rule 41 of the Rules of Court

2) Service of summons upon Baliwag Transit, through its - A default judgment is an adjudication on the merits and is
cashier, Baby Cansino, is proper thus appealable

- Under Section 13 of Rule 14 of the Revised Rules of Court, if SIDE NOTE


the defendant is a corporation organized under the laws of the
Philippines, service of summons may be made on the - Since driver has yet to come under court’s adjudicatory
president, manager, secretary, cashier, agent, or any of its powers, there is no proof adduced as to his negligence upon
directors which Baliwag’s primary but vicarious liability (under Art. 2180)
could be based
 Affidavit of Ms. Cansino stating that she is not the cashier of
respondent Baliwag, but merely a cash receiving clerk - No presumption of negligence in the selection and
deserves scant consideration for being self-serving supervision of employees can operate against or be overcome
by Baliwag since the factual basis for such presumption does
 The Sheriff's Return certifying that summons were served not exist
upon defendant Baliwag is prima facie evidence of the fact that
the person on whom the summons was served was in fact the Ortero v Tan
cashier of the company
FACTS:
 Affidavit cannot overcome the presumption that official duty
had been regularly performed, which presumption may be - Complaint- Tan filed for collection of sum of money and
overcome only by clear and convincing evidence damages with MTCC Cagayan de Oro against Otero alleging
that Otero purchased on credit petroleum products from his
- Even if Ms. Cansino is not the cashier, still service would be Petron outlet for P270k; despite demands, Otero defaulted
proper as she is considered an agent of the company
authorized to receive court processes - Despite receipt of summons through wife Otero, he failed to
file answer with MTCC
- Since respondents don’t deny that they actually received
summons, there is substantial compliance with the rules on - Tan then filed a Motion to declare Otero in default; Otero
service of summons denied receiving summons

- Service on respondent’s bus terminal (even if it is not the - Hearings were conducted until MTCC issued an order
corporation’s main office) does not render the service of declaring Otero in default, to which a copy was sent to Otero,
summons invalid and thereby allowing Tan to present his evidence ex parte: his
employees, showing various statements of account
 Artemio Baltazar v. CA: “Section 13, does not, however,
impose such requirement, and so personal service upon the MTCC
corporation may be effected through service upon, for instance,
the president of the corporation at his office, or residential - In favor of Tan, noting that Otero’s failure to file an answer
address” despite notice is a tacit admission of Tan’s claim

- TC validly acquired jurisdiction over Baliwag APPEAL TAKEN - Otero appealed to RTC asserting that MTCC’s decision is
BY RESPONDENTS WAS PROPER (PERTINENT UNDER factually baseless and that he was deprived of due process
THIS TOPIC)
RTC
- It is well-settled that, a defendant who has been declared in
default has the following remedies, to wit: - Affirmed MTCC, noting that the statements of account
presented were overwhelming enough to prove Otero’s
(a) He may, at any time after discovery of the default but indebtedness, and that he was served due notice contrary to
before judgment, file a motion, under oath, to set aside the Otero’s claim of deprivation of due process
- Otero filed for MR but was denied; then filed for review with - In this case, Otero asserts that Tan failed to prove the
CA material allegations of his complaint since the statements of
account which he presented are inadmissible in evidence
- Explaining that evidence presented were presented
by Betache who was not a witness by Tan - Contrary then to CA, it is not accurate to state that having
been declared in default by the MTCC, Otero is already
- That the genuineness and due execution of said deemed to have waived any and all defenses which he may
statements of account, being private, must first be established have against Tan’s claim
lest the said documents be rendered inadmissible in evidence
RULE 6
CA Section 2. Pleadings allowed. — The claims of a party
are asserted in a complaint, counterclaim, cross-claim, third
- Assailed RTC and MTCC decision, noting that any defense (fourth, etc.)-party complaint, or complaint-in-intervention.
which Otero may have against Tan is already deemed waived
due to Otero’s failure to file his answer The defenses of a party are alleged in the answer to the
pleading asserting a claim against him.
ISSUE:
An answer may be responded to by a reply. (n)
- WON Otero, declared in default by MTCC, in the appellate
proceedings, may still raise the failure of Tan to authenticate Section 6. Counterclaim. — A counterclaim is any claim
the statements of account which he adduced in evidence which a defending party may have against an opposing party.
(6a)
HELD:
Section 7. Compulsory counterclaim. — A compulsory
- YES counterclaim is one which, being cognizable by the regular
courts of justice, arises out of or is connected with the
- A defendant who fails to file an answer may, upon motion, be transaction or occurrence constituting the subject matter of the
declared by the court in default opposing party's claim and does not require for its adjudication
the presence of third parties of whom the court cannot acquire
- A party in default loses his right to present his jurisdiction. Such a counterclaim must be within the jurisdiction
defense, control the proceedings, and examine or cross- of the court both as to the amount and the nature thereof,
examine witnesses except that in an original action before the Regional Trial
Court, the counter-claim may be considered compulsory
- However, the fact that a defendant has lost his standing in regardless of the amount. (n)
court for having been declared in default does not mean that
he is left without recourse Section 9. Counter-counterclaims and counter-
crossclaims. — A counter-claim may be asserted against an
- Remedies available to party in default (Lina v CA, et original counter-claimant.
al):
A cross-claim may also be filed against an original cross-
- May, at any time after discovery thereof claimant. (n)
and after judgment, file a motion, under oath, to set aside the
order of default on the ground that his failure to answer was RULE 9
due to fraud, accident, mistake, or excusable neglect, and that Section 2. Compulsory counterclaim, or cross-claim,
he has meritorious defenses not set up barred. — A compulsory counterclaim, or a cross-
claim, not set up shall be barred. (4a)
- If judgment has been rendered when
defendant discovered default, but before the same has
RULE 11
become final and executor, he may file a motion for new trial
Section 4. Answer to counterclaim or cross-claim. — A
counterclaim or cross-claim must be answered within ten (10)
- If defendant discovered the default after the
days from service. (4)
judgment has become final and executor, he may file a petition
for relief
Section 8. Existing counterclaim or cross-claim. — A
compulsory counterclaim or a cross-claim that a defending
- He may also appeal from the judgment
party has at the time he files his answer shall be contained
rendered against him as contrary to the evidence or to the law,
therein. (8a, R6)
even if no petition to set aside the order of default has been
presented by him
Section 9. Counterclaim or cross-claim arising after
answer. — A counterclaim or a cross-claim which either
- Grounds that may be raised in such an appeal:
matured or was acquired by a party after serving his pleading
- Failure of plaintiff to prove material may, with the permission of the court, be presented as a
allegations of the complaint counterclaim or a cross-claim by supplemental pleading before
judgment. (9, R6)
- Decision is contrary to law
Section 10. Omitted counterclaim or cross-claim. —
- Amount of judgment is excessive or When a pleader fails to set up a counterclaim or a cross-claim
different in kind from that prayed for through oversight, inadvertence, or excusable neglect, or when
justice requires, he may, by leave of court, set up the
counterclaim or cross-claim by amendment before judgment.
RULE 16 Note: It is not a compulsory counterclaim when the
Section 6. Pleading grounds as affirmative defenses. — counterclaim has another indispensible party who is not a party
If no motion to dismiss has been filed, any of the grounds for to the original case. Example: A files a suit for damages
dismissal provided for in this Rule may be pleaded as an against B which arose from a contract. C is B’s co-party in the
affirmative defense in the answer and, in the discretion of the contract. B’s counterclaim is an action for rescission of the
court, a preliminary hearing may be had thereon as if a motion contract. This would not be a compulsory counter claim
to dismiss had been filed. (5a) because C is not a party to the original suit, would be an
indispensible party in the counterclaim.
The dismissal of the complaint under this section shall be
without prejudice to the prosecution in the same or separate GOJO v GOYOLA
action of a counterclaim pleaded in the answer. (n)
Facts
RULE 17
· On 26 May 1951, Segundo, Goyala together with his
Section 2. Dismissal upon motion of plaintiff. — Except now deceased wife Antonina Almoguera sold to appellant by a
as provided in the preceding section, a complaint shall not be "Deed of Pacto de Retro Sale" a certain parcel of agricultural
dismissed at the plaintiff's instance save upon approval of the land (2.5 ha for P750.00), the repurchase to be made,
court and upon such terms and conditions as the court deems according to the deed, within one year.
proper. If a counterclaim has been pleaded by a defendant
prior to the service upon him of the plaintiffs motion for · On July 4, 1951, the vendee paid another P100.00 as
dismissal, the dismissal shall be limited to the complaint. The addition to the purchase price.
dismissal shall be without prejudice to the right of the
defendant to prosecute his counterclaim in a separate action · About ten (10) years after the execution of the said
unless within fifteen (15) days from notice of the motion he document, the vendee filed with the CFI by way of a petition for
manifests his preference to have his counterclaim resolved in consolidation of ownership of the land described and involved
the same action. Unless otherwise specified in the order, a in the "Deed of Pacto de Retro Sale."
dismissal under this paragraph shall be without prejudice. A
class suit shall not be dismissed or compromised without the · The vendee alleged that the date for repurchase, May
approval of the court. (2a) 26, 1952, having expired and the vendors not having been able
to repurchase, the ownership over the land involved had
CIVIL CODE become consolidated in him; and that for the purpose of
Art. 1283. If one of the parties to a suit over an obligation has a recording in the Registry of Property the said consolidation of
claim for damages against the other, the former may set it off ownership, it was necessary that a judicial order be issued to
by proving his right to said damages and the amount thereof. that effect and accordingly prayed for such an order.
(n)
· Segundo Goyala filed an opposition or answer to the
RSC petition and alleged the ff:
SEC. 13. Response.– The defendant shall file with the court
and serve on the plaintiff a duly accomplished and verified 1. his wife Antonina had died in the year 1959
Response within a non-extendible period of ten (10) days from 2. denied the pacto de retro sale, it was a cash loan of
receipt of summons. The Response shall be accompanied by P750.00 payable in one year without interest
certified photocopies of documents, as well as affidavits of 3. additional 60 pesos was granted as loan
witnesses and other evidence in support thereof. No evidence 4. respondents executed a mortgage in favor of the
shall be allowed during the hearing which was not attached to petitioner on a parcel of coconut land described
or submitted together with the Response, unless good cause is 5. although the deed was executed in the form of a
shown for the admission of additional evidence. pacto de retro sale, the true and real intention of the
parties thereto was that the same was a mere
RSP mortgage to secure the payment of the original loan of
Sec. 3. Pleadings. — P750.00 together with the additional amount received
thereafter, making a total loan of P810.00, payable
A. Pleadings allowed. — The only pleadings allowed to within, one year without interest.
be filed are the complaints, compulsory counterclaims 6. in the evening of May 26, 1952, he and his wife went
and cross-claims' pleaded in the answer, and the to the house of the petitioner and tendered to him the
answers thereto. sum of P810.00 to pay the debt, but said petitioner
refused to receive the same and to cancel the
Sec. 5. Answer. — Within ten (10) days from service of document of mortgage.
summons, the defendant shall file his answer to the complaint 7. He filed a counterclaim and prayed that
and serve a copy thereof on the plaintiff. Affirmative and
negative defenses not pleaded therein shall be deemed - Court dismiss the petition
waived, except for lack of jurisdiction over the subject matter. - Order Gojo to accept the 810
Cross-claims and compulsory counterclaims not asserted in - Declare the document to be mortgage and not a pacto de
the answer shall be considered barred. The answer to retro sale, and ordering the same cancelled and with no
counterclaims or cross-claims shall be filed and served within more force and effect;
ten (10) days from service of the answer in which they are - Ordering the petitioner to pay the respondents the sum of
pleaded. P1,800.00 per annum beginning May 26, 1951 until the
final termination of this case as the reasonable monetary
value of the products for the said property, and from this
amount, there should be deducted however, the
corresponding legal interest annually on said loans;
- In case, however, that this Court should find the said procedure and manner outlined in Rule 3, Section 17 of the
instrument to be a true pacto de retro sale, and not a Rules of Court, which provide:.
mere mortgage, it is hereby prayed that the petitioner be
ordered to execute a deed of resale or repurchase of said "SECTION 17. Death of party. — After a party dies and
property in favor of the respondents in accordance with the claim is not thereby extinguished, the court shall order,
Art. 1606 third paragraph of the Civil Code." upon proper notice, the legal representative of the deceased to
appear and to be substituted for the deceased, within a period
· Goyala informed the trial court that the Antonina was of thirty (30) days, or within such time as may be granted. If the
already dead and that her surviving nearest kin are her legal representative fails to appear within said time, the court
children, namely: Leonor, Pedro, Juliana, Dolores, Valentina, may order the opposing party to procure the appointment of a
Soledad, Penya, Mamerta, Salvador, Genesa, Felipe, Elegio legal representative of the deceased within a time to be
— all surnamed Goyala. specified by the court, and the representative shall immediately
appear for and on behalf of the interest of the deceased. The
· RTC required the plaintiff is to submit an amended court charges involved in procuring such appointment, if
Complaint substituting therein for one of the defendants, defrayed by the opposing party, may be recovered as costs.
Antonina Almoguera, now deceased her successors in interest The heirs of the deceased may be allowed to be substituted for
as party defendants, within the reglementary period. the deceased, without requiring the appointment of an executor
or administrator and the court may appoint guardian ad litem
· Goyala filed a motion to dismiss the complaint or petition for the minor heirs."
on the ground that 43 days had lapsed after appellant's receipt
of the trial court order, yet he failed and neglected to submit Barrameda vs. Barbara: an order to amend the complaint,
the amended complaint required of him. before the proper substitution of parties as directed by the rule
has been effected, is void and imposes upon the plaintiff no
· Trial court granted the MTD. duty to comply therewith to the end that an order dismissing
the said complaint, for such non-compliance, would similarly be
· Goyola filed a motion to declare Gojo in default in void.
respect of said appellee's counterclaim. TC granted the petition
Ferriera, et al. vs. Gonzales (1958), the continuance of a
· The Trial court ruled in favor of the defendant proceedings during the pendency of which a party thereto dies,
(counterclaim) without such party having been validly substituted in
accordance with the rules, amounts to a "lack of jurisdiction".
o Deed of Pacto de Retro Sale an equitable mortgage and
Goyala and Almoguera are allowed to redeem the property; WON PLAINTIFF IS IN DEFAULT WITH RESPECT TO
DEFENDANT'S COUNTERCLAIM;
o orders Faustino Gojo to withdraw the amount of P810.00
deposited with the Clerk of Court in full settlement of the loan, No occasion for the trial court to declare him in default in
respect of appellee's counterclaim in this case, for the reasons
o cancels and declares without force and effect the that:
aforementioned Deed of Pacto de Retro Sale executed by the
spouses Segundo Goyala and Antonina Almoguera in favor of (a) counterclaim "falls within the category of compulsory
Faustino Gojo. Without costs counterclaim" which does not call for an independent answer
as the complaint already denies its material allegations; and
o ordering the plaintiff to deliver and restore the possession
of the land in question to the defendants. (b) dismissal of the complaint in this case without prejudice
carried with it the dismissal of the said counterclaim.
· Appellant appealed to the Court of Appeals which upon
its finding that the said appeal involves purely questions of law,
certified the same to this Court for resolution.
A plaintiff who fails or chooses not to answer a compulsory
Issues counterclaim may not be declared in default, principally
because the issues raised in the counterclaim are deemed
[RELEVANT ISSUE] WON THE TRIAL COURT ERRED IN automatically joined by the allegations of the complaint.
DISMISSING PETITIONER’S COMPLAINT
There can be no doubt that appellant's counterclaim was a
It is true that under Section 3 of Rule 17, a complaint may be compulsory one in as much as it arises out of or is necessarily
dismissed for failure to prosecute if the plaintiff fails to comply connected with transaction or occurrence that is the subject
with an order of the court, but it is obvious that the said matter of the complaint; the complaint alleged that the right of
provision cannot apply when the order supposedly ignored is a appellee to repurchase the property in question had already
void one, as in this case. expired and asked for an order of consolidation.

The trial court ordered petitioner to amend the complaint only Appellant's counterclaim was for reformation of the deed
because it was informed that one of the defendants had died, claiming that it was only a mortgage. Thus the counterclaim
the court directing that the plaintiff should name the heirs of the was clearly inconsistent with and directly controverted; the
deceased as defendants in lieu of said deceased. Such an whole theory and basic allegations of the complaint. In
order runs counter to Caseñas vs. Resales, et al.: consequence, appellant's complaint stood as the answer to
appellee's counterclaim; hence, the incorrectness of the trial
When certain parties die and due notice was given to the trial court's order declaring the appellant in default in regard to said
court, it devolved on the said court to order, not the counterclaim is evident.
amendment of the complaint, but the appearance of the legal
representatives of the deceased in accordance with the
Besides, in line with the principle underlying Sec. 2 of Rule 17, Held:
it is not proper to dismiss a complaint when a compulsory
counterclaim has been pleaded by defendant. Yes. The instant case is barred due to Forbes Park’s failure to
set it up as a compulsory counterclaim in the earlier case.
The reason is obvious. Under the cited provision, the right of
the plaintiff to move for the dismissal of an action after the A compulsory counterclaim is one which arises out of or is
defendant has filed his answer is qualified by the clause necessarily connected with the transaction or occurrence that
providing that: "If a counterclaim has been pleaded by a is the subject matter of the opposing party’s claim.[15] If it is
defendant prior to the service upon him of the plaintiff's motion within the jurisdiction of the court and it does not require for its
to dismiss, the action shall not be dismissed against the adjudication the presence of third parties over whom the court
defendant's objection unless the counterclaim can remain cannot acquire jurisdiction, such compulsory counterclaim is
pending for independent adjudication by the court." With this barred if it is not set up in the action filed by the opposing
limitation, the power of the court to dismiss the complaint upon party.[16]
motion of plaintiff, which is usually without prejudice, is not
purely discretionary. The purpose is to avoid multiplicity of suits Thus, a compulsory counterclaim cannot be the subject of a
over the same matter which would necessarily entail separate action but it should instead be asserted in the same
unnecessary expense and, what is worse, possibility of conflict suit involving the same transaction or occurrence, which gave
and inconsistency in the resolution of the same questions. The rise to it
same considerations would obtain, if the defendant were the
one to ask for dismissal. The best interests of justice require To determine whether a counterclaim is compulsory or not, we
that conflicting claims regarding the same matter should be have devised the following tests: (1) Are the issues of fact or
decided in one single proceeding. Dismissing the complaint law raised by the claim and the counterclaim largely the same?
without prejudice, as the trial court has done in this case, albeit (2) Would res judicata bar a subsequent suit on defendant’s
upon motion of the defendant, will not prevent the undesirable claim absent the compulsory counterclaim rule? (3) Will
multiplication of suits and reventilation of the same issues in substantially the same evidence support or refute plaintiff’s
the subsequent action that may be filed by virtue of the claim as well as the defendant’s counterclaim? and (4) Is there
reservation made in the disputed order of dismissal. any logical relation between the claim and the counterclaim?
Affirmative answers to the above queries indicate the existence
of a compulsory counterclaim.

FINANCIAL BUILDING CORP V FORBES PARK Since Forbes Park filed a motion to dismiss in Civil Case No.
16540, its existing compulsory counterclaim at that time is now
Facts: barred.

The USSR owned a lot in Forbes Park and it engaged the A compulsory counterclaim is auxiliary to the proceeding in the
services of Financial Building for the construction of a multi- original suit and derives its jurisdictional support therefrom.[19]
level office and staff apartment building. Due to the USSR’s A counterclaim presupposes the existence of a claim against
representation that it would be building a residence for its the party filing the counterclaim. Hence, where there is no
Trade Representative, Forbes Park authorized its construction claim against the counterclaimant, the counterclaim is improper
and work began shortly thereafter. However, Financial building and it must dismissed, more so where the complaint is
submitted to the Makati City Government a second building dismissed at the instance of the counterclaimant.
plan for the construction of a multi-level apartment building,
which was different from the first plan for the construction of a
residential building submitted to Forbes Park.
CALO V. AJAX INTERNATIONAL 22 SCRA 996 (1968)
Forbes Park discovered the second plan and it enjoined further
construction work. Forbes Park suspended all permits of entry
for the personnel and materials of Financial Building in the said
construction site. FACTS: Plaintiff Calo ordered from defendant Ajax
International 1,200 ft of John Shaw wire rope evidenced by
Financial Building filed in the Regional Trial Court a complaint Charge Order no 37071 for P3,420
for Injunction and Damages with a prayer for Preliminary
Injunction against Forbes Park. Forbes Par, in turn, filed a 1. Plaintiff alleged that when the said rope was delivered,
Motion to Dismiss on the ground that Financial Building had no it was 300 ft short. Plaintiff then wrote a letter asking for
cause of action because it was not the real party-in-interest. complete delivery or account adjustment of the alleged
Forbes Park won in this case thus it sought to vindicate its undelivered wire rope
rights by filing a complaint for damages against Financial
Building arising from the violation of its regulations. Trial court 2. Incidentally, Adolfo Benavides acquired the
rendered a decision in favor or Forbes Park. outstanding credit of Calo from Ajax. Benavides filed a
complaint against Calo before MTC Manila. A judgment by
Issue: default was entered and a writ of execution was issued against
Calo. The case was later remanded for further proceedings
W/N THE ALLEGED CLAIMS AND CAUSES OF ACTION
THEREIN ARE BARRED BY PRIOR JUDGMENT AND/OR 3. In turn, Calo filed before CFI Agusan a complaint
ARE DEEMED WAIVED FOR ITS FAILURE TO INTERPOSE against Ajax asking for either complete delivery of charge order
THE SAME AS COMPULSORY COUNTERCLAIMS IN THE no 37071 of that she be relieved from paying P855
EARLIER CASE
4. Instead of filing an answer, Ajax moved for the decision, the Bacalan filed an appeal with Branch Ill of the
dismissal of the case on the ground that the subject matter Court of First Instance of Cebu.
involved was related to a pending case filed in Manila by
Benavides. The trial court sustained the motion and dismissed CFI reverses in favor of Bacalan, it also awarded huge
the case. Plaintiff filed MR (denied). amounts of damages (16000 total)

5. The dismissal of the case in CFI Agusan was The judgment ordered Agustin to pay the ff amounts
premised on the theory that the petitioner’s claim is a
compulsory counterclaim to the case filed before MTC Manila a) P10,000.00 as moral damages;

ISSUE: WON the case filed in CFI Agusan is a compulsory b) P5,000.00 as exemplary damages;
counter-claim
c) P1,000.00 as attorney's fees; and
HELD: No, the plaintiff’s claim is not a compulsory
counterclaim for the simple reason that the amount thereof
exceeds the jurisdiction of the municipal trial court. The rule
that a compulsory counterclaim not set up is barred, when NO APPEAL was taken by AGUSTIN. The decision lapsed into
applied to the municipal court, presupposes that the amount is finality and became executory.
within the said court’s jurisdiction. Otherwise, it would result to
an absurd situation where a claim must be filed within the MTC Agustin files a new complaint! He claims that the damages
which is prohibited from taking cognizance of, being beyond its awarded are beyond jurisdiction of City court of Cebu, hence
jurisdiction. void.

Besides, the reason underlying the rule, which is to settle all Thereafter, with the aid of new counsel, Agustin filed another
related controversies in one sitting only, is not obtained. Even complaint with Branch V, CFI of Cebu for the declaration of the
if the counterclaim in excess of the amount cognizable by the nullity of the above-cited decision of Branch III, CFI of Cebu
inferior court is set up, the defendant cannot obtain positive because the award (16,000) exceeded the jurisdictional
relief. The rules allow this only for the defendant to prevent amount cognizable by the City Court of Cebu and the said
plaintiff from recovering from him. This means that should the Branch III of this Court has no jurisdiction to award the
court find both plaintiff’s complaint and the defendant’s defendants an amount more than P10,000.00.
counterclaim (for an amount exceeding said court’s jurisdiction)
meritorious, it will simply dismiss the complaint on the ground He claims that this is beyond the jurisdiction of the City Court
that the defendant has a bigger credit. Since the defendant still of Cebu because Section 88 of the Judiciary Act of 1948, as
has to institute a separate action for the remaining balance of amended, limits the jurisdiction of the city courts in civil cases
his counterclaim, the previous litigation did not really settle all to P10, 000.00 as the maximum amount of the demand.
related controversies.
ISSUE: WON the Court of First Instance may, in an appeal,
Plaintiff Calo's claim of P12,000.00 not being a compulsory award the defendant-appellee's counterclaim in an amount
counterclaim in Civil Case No. VI-93062, it need not be filed exceeding or beyond the jurisdiction of the court of origin.
there. The pendency then of said civil case could not be
pleaded in abatement of Civil Case No. 860. Consequently, the HELD: NO
lower court erred in dismissing plaintiff's complaint.
A court has no jurisdiction to hear and determine a set-off or
counterclaim in excess of its jurisdiction

DISPOSITIVE: The order of dismissal is reversed and the A counterclaim beyond the court’s jurisdiction may only be
case is remanded for further proceedings pleaded by way of defense, the purpose of which, however, is
only to defeat or weaken plaintiff’s claim, but NOT to obtain
AGUSTIN V BACALAN affirmative relief (Section 5, Rule 5). Nevertheless, Bacalan set
up his claim in excess of the jurisdiction of the city court as a
FACTS compulsory counterclaim.

Ejectment complaint filed against Bacalan who files a What is the legal effect of such a move?
counterclaim
The effect of that is to waive so much of your claim as would
Bacalan is a lessee of a one-door ground floor space in a exceed the jurisdictional amount
building owned by the late Susana Agustin. Due to
nonpayment of rentals an action to eject him was filed. An appellant who files his brief and submits his case to the
Court of Appeals for decision, without questioning the latter's
In his answer, Bacalan included a counter-claim alleging that jurisdiction until decision is rendered therein, should be
the action was "unfounded and devoid of merits, tainted with considered as having voluntarily waives so much of his claim
malice and bad faith on the part of the plaintiff, and filed merely as would exceed the jurisdiction of said Appellate Court
to annoy, vex, embarrass and inconvenience the defendant."
Thus, by presenting his claim voluntarily before the City Court
City Court Of Cebu dismissed counterclaim and ordered him to of Cebu, the defendant-appellee submitted the same to the
vacate, Bacalan appeals before CFI Cebu jurisdiction of the court. He became bound thereby. The
amount of P10,000.00 being the jurisdictional amount assigned
The City Court of Cebu dismissed the counterclaim and the City Court of Cebu, whose jurisdiction the defendant-
ordered the Bacalan to vacate and pay damages. From this appellee has invoked, he is thereby deemed to have waived
the excess of his claim beyond P10,000.00. It is as though the
defendant-appellee had set up a counterclaim in the amount of against petitioner Lydia Meliton for rescission of a contract of
P10,000.00 only. lease over a parcel of land. Alleged grounds: failure to deposit
the one month rental and to pay the monthly rentals due; her
May the CFI then, on appeal, award defendant-appellee's construction of a concrete wall and roof on the site of a
counterclaim beyond that amount? demolished house on the leased premises without the lessor's
written consent; and her unauthorized sublease of the leased
STILL NO: A counterclaim not presented in the inferior court property to a third party.
cannot be entertained in the Court of First Instance on appeal
 July 29, 1988: Meliton filed an answer to the complaint
Thus, the defendant-appellee's counterclaim beyond denying the material averments thereof and setting up three
P10,000.00, the jurisdictional amount of the city Court of Cebu, counterclaims for recovery of the value of her kitchenette
should be treated as having been deemed waived. It is as constructed on the leased parcel of land and which was
though it has never been brought before trial court. It may not demolished by private respondent; the value of the
be entertained on appeal. improvements introduced in the kitchenette to beautify it, plus
the value of the furniture and fixtures purchased for use in the
The amount of judgment, therefore, obtained by the defendant- kitchenette; and moral damages, attorney's fees
appellee on appeal, cannot exceed the jurisdiction of the court
in which the action began. Since the trial court did not acquire  May 29, 1989: Trial Court, on motion of private respondent
jurisdiction over the defendant's counterclaim in excess of the contending that her cause of action had already become moot
jurisdictional amount, the appellate court, likewise, acquired no and academic by the expiration of the lease contract,
jurisdiction over the same. Appellate jurisdiction being not only dismissed the complaint.
a continuation of the exercise of the same judicial power which
has been executed in the court of original jurisdiction, also  The counterclaims of Meliton were also dismissed for non-
presupposes that the original and appellate courts are capable payment of the docket fees.
of participating in the exercise of the same judicial power
 On December 6, 1989, petitioners Lydia Meliton and Virgilio
Application Meliton filed a complaint against private respondent for
recovery of the same amounts involved and alleged in their
Award of damages in excess of the jurisdictional amount (10k) counterclaims in Civil Case No. RTC 88-1480, which complaint
is null and void was docketed as Civil Case No. RTC 89-1942

It is, of course, a well-settled rule that when court transcends  On February 15, 1991, private respondent filed a motion to
the limits prescribed for it by law, its adjudications will be utterly dismiss the complaint on the ground that the cause of action
void and of no effect either as an estoppel or otherwise. therein was barred by prior judgment in Civil Case No.RTC 88-
1480
The Court of First Instance, in the case at bar, having awarded
judgment in favor of the defendant-appellee in excess of its  On February 22, 1991, the court denied Ziga's motion to
appellate jurisdiction to the extent of P6,000.00 over the dismiss the complaint in Civil Case No. RTC 89-1942 on the
maximum allowable award of P10,000.00, the excess is null ground that the dismissal of the petitioner's counterclaims in
and void and of no effect. Such being the case, an action to Civil Case No. RTC 88-1480 is not an adjudication on the
declare the nullity of the award as brought by the plaintiff- merits as the court did not acquire jurisdiction over the
appellant before the Court of First Instance of Cebu, Branch V counterclaims for failure of Meliton to pay the docket fees,
is a proper remedy. hence the said dismissal does not constitute a bar to the filing
of the later complaint.
A counterclaim is a cause of action separate and independent
from the plaintiffs claim over against the defendant.  Ziga's motion for reconsideration of the foregoing order was
denied by the lower court for lack of merit in its order of March
(This is why the court’s jurisdiction over the main action would 18, 1991. Ziga went to the SC but was referred to CA. CA
not be affected even if the counterclaim is void, since they are granted CA’s petition, thus this appeal by Meliton.
separate causes of action)
ISSUES: 1. Whether or not the counterclaims of petitioners are
The nullity of such portion of the decision in question, however, compulsory in nature. - Compulsory
is not such as to affect the conclusions reached by the court in
the main case for ejectment. As held in a case where the 2. Whether or not petitioners, having failed to seek
amount set up by the defendant was not proper as a defense reconsideration of or to take an appeal from the order of
and it exceeded the inferior court's jurisdiction, it cannot be dismissal of their counterclaims, are already barred from
entertained therein, but the court's jurisdiction over the main asserting the same in another action. – NO
action will remain unaffected. Consequently, the decision over
the main action, in the case at bar, must stand, best HELD: Issue #1
remembering that a counter-claim, by its very nature, is a
cause of action separate and independent from the plaintiff's  Counterclaim is compulsory if (a) it arises out of, or is
claim against the defendant. necessarily connected with, the transaction or occurrence
which is the subject matter of the opposing party's claim; (b) it
MELITON V CA does not require for its adjudication the presence of third
parties of whom the court cannot acquire jurisdiction; and (c)
FACTS: the court has jurisdiction to entertain the claim.

 June 22, 1988: Respondent Nelia Ziga, in her own behalf  The determination of whether the counterclaim is
and as attorney-infact of Alex A. Ziga and Emma A. Ziga-Siy, compulsory or permissive, the "one compelling test of
filed a complaint, docketed as Civil Case No. RTC 88-1480
compulsoriness" is the logical relationship between the claim parties, of subject matter, and of causes of action.
alleged in the complaint and that in the counterclaim, that is,
where conducting separate trials of the respective claims of the  Civil Case No. RTC 88-1480, was dismissed upon motion of
parties would entail a substantial duplication of effort and time, private respondent, plaintiff therein, under Section 2 of Rule 17.
as where they involve many of the same factual and/or legal Dismissal thereunder is without prejudice, except when
issues. otherwise stated in the motion to dismiss or when stated to be
with prejudice in the order of the court. The dismissal of the
 In the Civil Case No. 88-1480, all the requisites of a case without prejudice indicates the absence of a decision on
compulsory counterclaim are present. The counterclaims are the merits and leaves the parties free to litigate the matter in a
logically related to the complaint. Ziga’s complaint was for subsequent action as though the dismissal action had not been
rescission of the contract of lease due to Meliton's breach of commenced. The discontinuance of a case not on the merits
her obligations under the said contract. On the other hand, does not bar another action on the same subject matter.
Meliton's counter claims were for damages for unlawful Evidently, therefore, the prior dismissal of herein petitioners’
demolition of the improvements she introduced pursuant to her counterclaims is not res judicata and will not bar the filing of
leasehold occupancy of the premises, as well as for the filing of another action based on the same causes of action.
that civil suit which is contended to he clearly unfounded. Both
the claims therein of petitioners and private respondent arose  Also, the trial court, in dismissing the complaint of private
from the same contract of lease. The rights and obligations of respondent, did not intend to prejudice the claims of petitioners
the parties, as well as their potential liability for damages, by barring the subsequent judicial enforcement thereof. As
emanated from the same contractual relation. stated therein, “(t)he court in dismissing the counterclaim(s)
has taken into account the fact that a counterclaim partakes of
 Petitioners' right to claim damages for the unlawful the nature of a complaint and/or a cause of action against the
demolition of the improvements they introduced on the land plaintiffs." This is a clear indication, deducible by necessary
was based on their right of possession under the contract of implication, that the lower court was aware of the fact that
lease which is precisely the very same contract sought to be petitioners could avail of the causes of action in said
rescinded by private respondent in her complaint. counterclaims in a subsequent independent suit based thereon
and that there was no legal obstacle thereto.
 CA correctly held that the counterclaims of petitioners are
compulsory in nature.  In dismissing private respondent's complaint, the trial court
could not but have reserved to petitioners, as a condition for
Issue #2 such dismissal, the right to maintain a separate action for
damages. Petitioners' claims for damages in the three
 According to Section 4, Rule 9 of the Rules of Court, a counterclaims interposed in said case, although in the nature
counterclaim not set up shall be barred if it arises out of or is of compulsory counterclaims but in light of the aforesaid
necessarily connected with the transaction or occurrence that reservation in the dismissal order, are consequently
is the subject matter of the opposing party's claim and does not independent causes of action which can be the subject of a
require for its adjudication the presence of third parties of separate action against private respondent.
whom the court cannot acquire jurisdiction. However, said rule
is not applicable to the case at bar.  Assuming arguendo that the bar under the rule on
compulsory counterclaims may be invoked, the peculiar
 Contrary to the claim of private respondent, it cannot be said circumstances of this case irresistibly and justifiedly warrant
that herein petitioners failed to duly interpose their causes of the relaxation of such rule. The court a quo dismissed
action as counterclaims in the previous action. petitioners' counterclaims for non–payment of docket fees
pursuant to our then ruling in Manchester Development
 Petitioners' claims were duly set up as counterclaims in the Corporation, et al. vs. Court of Appeals, et. al. before its
prior case but the same were dismissed by reason of non- modification. The failure of petitioners to seek reconsideration
payment of docket fees. The ruling of respondent Court of of or to take an appeal from the order of dismissal of the
Appeals to the effect that the failure of petitioners to appeal or counterclaim should not prejudice their right to file their claims
to move for reconsideration of the said order of dismissal bars in a separate action because they were thereby made to
them from asserting their claims in another action cannot be understand and believe that their counterclaims were merely
upheld. permissive and could be the subject of a separate and
independent action. Under the Rules, there is no need to pay
 Where a compulsory counterclaim is made the subject of a docket fee for a compulsory counterclaim. The ruling in
separate suit, it may be abated upon a plea of auter action Manchester applies specifically to permissive counterclaims
pendant or litis pendentia and/or dismissed on the ground of only, thereby excluding compulsory counterclaims from its
res judicata, depending on the stage or status of the other suit. purview, and that was the ruling of the court below to which the
litigants therein submitted. Had the trial court correctly
 The present action cannot be dismissed either on the ground specified that petitioners' counterclaims were compulsory,
of litis pendentia since there is no other pending action petitioners could have objected to the dismissal sought by
between the same parties and for the same cause, nor on the private respondent on the ground that said counterclaims could
ground of res judicata. not remain pending for independent adjudication.

 In order that a prior judgment will constitute a bar to a VISAYAN PACKING v REPACOM
subsequent case, the following requisites must concur: (1) the
judgment must be final; (2) the judgment must have been Narvasa, J.
rendered by a court having jurisdiction over the subject matter
and the parties; (3) the judgment must be on the merits; and (4) Facts: Petitioner and respondent entered into a contract of sale.
there must be between the first and second actions, identity of Under the contract, petitioner bound itself to pay the purchase
price in ten (10) equal yearly installments with interest. Prior to
the due date of the first installment, respondent sent petitioner Issue
a written reminder thereof. Petitioner, however, responded by
filing in the CFI of Manila two (2) special civil actions for WON there was jurisdiction over petitioner for counterclaim
declaratory relief, alleging ambiguity in the contract between it
and respondent consisting in the agreement’s failure to clearly YES. With regard to the procedural issue raised by petitioners
state the precise time when the obligation to pay the first allegation, that it needed to be summoned anew in order for
installment of the price would arise. Respondent filed a civil the court to acquire jurisdiction over it, we agree with
action for collection based on what it deemed to be the due respondent courts view to the contrary. Section 4, Rule 11 of
date. Petitioner moved to dismiss the collection suit alleging the Rules of Court provides that a counterclaim or cross-claim
that because of the pendency of the declaratory relief actions, must be answered within ten (10) days from service. Nothing in
no cause of action could be deemed to exist in favor of the Rules of Court says that summons should first be served
respondent for collection. The Motion was however denied and on the defendant before an answer to counterclaim must be
petitioner was later ordered to pay respondent the sum claimed. made. The purpose of a summons is to enable the court to
Petitioner appealed the decision. The Court of Appeals acquire jurisdiction over the person of the defendant. Although
affirmed the decision in the collection suit. Petitioner assailed a counterclaim is treated as an entirely distinct and
the decision contending that the money claim should have independent action, the defendant in the counterclaim, being
been set up as a compulsory counterclaim in the declaratory the plaintiff in the original complaint, has already submitted to
relief action, and since respondent had not done this, but had the jurisdiction of the court. Following Rule 9, Section 3 of the
instead set it up in a separate suit, the claim had thereby 1997 Rules of Civil Procedure,[21] if a defendant (herein
become barred. petitioner) fails to answer the counterclaim, then upon motion
of plaintiff, the defendant may be declared in default. This is
what happened to petitioner in this case, and this Court finds
no procedural error in the disposition of the appellate court on
Issue: Whether the failure to set up the money claim in the this particular issue. Moreover, as noted by the respondent
declaratory relief actions barred its collection in a separate civil court, when petitioner filed its motion seeking to set aside the
case? order of default, in effect it submitted itself to the jurisdiction of
the court. As well said by respondent court:

Further on the lack of jurisdiction as raised by plaintiff-


Held: No. There is nothing in the nature of a special civil action appellant[,] [t]he records show that upon its request, plaintiff-
for declaratory relief that proscribes the filing of a counterclaim appellant was granted time to file a motion for reconsideration
based on the same transaction, deed or contract subject of the of the disputed decision. Plaintiff-appellant did file its motion for
complaint. Ideally, in the case at bar, the separate action for reconsideration to set aside the order of default and the
collection should have been dismissed and set up as a judgment rendered on the counterclaim.
compulsory counterclaim in the declaratory relief suits, by way
of an amended answer. This was not done. The actions Thus, even if the court acquired no jurisdiction over plaintiff-
proceeded separately and were decided on the merits. The appellant on the counterclaim, as it vigorously insists, plaintiff-
final verdict was that the declaratory relief suits instituted by appellant is considered to have submitted to the courts
petitioner were unmeritorious, quite without foundation and, in jurisdiction when it filed the motion for reconsideration seeking
the light of all the relevant facts, appear to have been initiated relief from the court. (Soriano vs. Palacio, 12 SCRA 447). A
by petitioner merely to obstruct and delay the payment of the party is estopped from assailing the jurisdiction of a court after
installments clearly due from it, payment of which was decreed voluntarily submitting himself to its jurisdiction. (Tejones vs.
in the collection suit. Under the circumstances, and taking into Gironella, 159 SCRA 100). Estoppel is a bar against any
account the not inconsiderable length of time that the case at claims of lack of jurisdiction.
bar has been pending, it would be to do violence to substantial
justice to pronounce the proceedings fatally defective for KOREA TECHNOLOGY v LERMA
breach of the rule on compulsory counterclaims. Rules of
procedure are after all laid down in order to attain justice. FACTS: Petitioner KOGIES and respondent PGSMC executed
a Contract whereby KOGIES would set up an LPG Cylinder
FRANCISCO V CA Manufacturing Plant for respondent. Respondent unilaterally
cancelled the contract on the ground that petitioner had altered
Facts: On 23 January 1985, Francisco Motors Corp. filed a the quantity and lowered the quality of the machineries and
complaint against Spouses Gregorio and Librada Manuel to equipment it delivered. Petitioner opposed informing the latter
recover P3,412.06, representing the balance of the jeep body that PGSMC could not unilaterally rescind their contract nor
purchased by the Manuels from Francisco Motors; an dismantle and transfer the machineries and equipment on
additional sum of P20,454.80 representing the unpaid balance mere imagined violations by petitioner. Petitioner then filed a
on the cost of repair of the vehicle; and P6,000.00 for cost of Complaint for Specific Performance against respondent before
suit and attorney's fees. To the original balance on the price the RTC. Respondent filed its Answer with Compulsory
of jeep body were added the costs of repair. In their Counterclaim asserting that it had the full right to dismantle and
answer, the Manuel spouses interposed a counterclaim for transfer the machineries and equipment because it had paid
unpaid legal services by Gregorio Manuel in the amount of for them in full as stipulated in the contract. KOGIES filed a
P50,000 which was not paid by the incorporators, directors and motion to dismiss respondent’s counterclaims arguing that
officers of Francisco Motors. The trial court decided the when PGSMC filed the counterclaims, it should have paid
case on 26 June 1985, in favor of Francisco Motors in docket fees and filed a certificate of non-forum shopping, and
regard to its claim for money, but also allowed the that its failure to do so was a fatal defect. The RTC dismissed
counter-claim of the Manuel spouses. Both parties the petitioner’s motion to dismiss respondent’s counterclaims
appealed. On 15 April 1991, the Court of Appeals as these counterclaims fell within the requisites of compulsory
sustained the trial court's decision. Hence, the present counterclaims.
petition for review on certiorari
ISSUE: WON payment of docket fees and certificate of non- to PEIA. Summons was served on Perkin Elmer Asia, sole
forum shopping were required in the respondent’s Answer with proprietorship owned by Perkin Elmer Singapore Pte Ltd
counterclaim? (Petitioner), allegedly separate and distinct from PEIA

HELD: NO. The counterclaims of PGSMC were incorporated in • PEIP moved to dismiss on ground that complaint
its Answer with Compulsory Counterclaim in accordance with states no cause of action
Section 8 of Rule 11, 1997 Revised Rules of Civil Procedure,
the rule that was effective at the time the Answer with • Perkin Elmer Asia wrote RTC and respondent about
Counterclaim was filed. Sec. 8 on existing counterclaim or wrongful service of summons upon them.
cross-claim states, “A compulsory counterclaim or a cross-
claim that a defending party has at the time he files his answer • Respondent filed Ex Parte Motion to Admit Amended
shall be contained therein.” As to the failure to submit a Complaint claiming PEIA had become a sole proprietorship
certificate of forum shopping, PGSMC’s Answer is not an owned by Petitioner and changed its name to Perkin Elmer
initiatory pleading which requires a certification against forum Asia. Amended Complaint was to change the name of PEIA to
shopping under Sec. 524 of Rule 7, 1997 Revised Rules of that of Petitioner. RTC admitted amended complaint.
Civil Procedure. It is a responsive pleading, hence, the courts a
quo did not commit reversible error in denying KOGIES’ motion • Respondent filed Motion for Issuance of Summons
to dismiss PGSMC’s compulsory counterclaims. At the time and for Leave of Court to Deputize Respondent’s General
PGSMC filed its Answer incorporating its counterclaims against Manager Richard Tee to Serve Summons outside of the PH.
KOGIES, it was not liable to pay filing fees for said General Manager went to SG and served summons on
counterclaims being compulsory in nature. We stress, however, Petitioner
that effective August 16, 2004 under Sec. 7, Rule 141, as
amended by A.M. No. 04-2-04-SC, docket fees are now • RTC denied Motion to Dismiss of PEIP
required to be paid in compulsory counterclaim or cross-claims.
• Petitioner filed with RTC Special Appearance and
NOTE: NO LONGER GOOD LAW BECAUSE OF OCA Motion to Dismiss on the ff. grounds:
CIRCULAR. Docket fees are now required to be paid in
compulsory counterclaim or cross-claim. 1. RTC did not acquire jurisdiction over the person of the
petitioner
PERKIN ELMER SINGAPORE PTE LTD V DAKILA TRADING
CORPORATION 2. Respondent failed to state cause of action against
petitioner because it is not the real party in interest
FACTS
3. Assuming arguendo that case was correctly filed,
• Perkin Elmer Singapore Pte Ltd (Petitioner) is a Distribution Agreement which was the basis of claim grants
corporation from Singapore NOT considered as a foreign PEIA right to terminate at any time
corporation doing business in the PH.
4. Venue improperly laid
• Dakila Trading Corporation (Respondent) is a
Philippine corporation engaged in the business of selling and • RTC denied Motion to Dismiss of Petitioner
leasing out laboratory instrumentation, process control
instrumentation and trading of laboratory chemicals and o Respondent alleges Petitioner owns shares of stocks
supplies. in PEIP and reveals that there is also an allegation of personal
property in the PH. Shares of stock represent personal
• Respondent entered into a Distribution Agreement property.
with Perkin-Elmer Instruments Asia Pte Ltd (PEIA), a
Singapore corporation manufacturing, producing, selling or o Even though Amended Complaint is primarily for
distributing laboratory/analytical instruments with the ff. terms: damages, it relates to property of Petitioner to which it claims
interest or an actual or contingent lien making it fall under
o PEIA appointed Respondent as sole distributor in the Extraterritorial service under Rule 14.15. Service of Summons
PH, with right to purchase and sell PEIA products and subject was VALID.
to a commission for sales.
o MTD was for failure to state Cause of Action. MTD
o Respondent was to order products of PEIA either hypothetically admits the truth of the facts alleged in the
from PEIA itself or from Perkin-Elmer Instruments (Philippines) complaint.
Corporation (PEIP), an affiliate of PEIP involved in wholesale
of scientific, biotechnical, and analytical instruments and  When MTD is under this ground, it can only be
appliances. PEIA allegedly owned 99% shares of PEIP determined from the facts alleged in the complaint and cannot
consider matters aliunde. Issue must be passed upon on basis
• PEIA unilaterally terminated the Distribution of allegations otherwise, procedural error or denial of due
Agreement. Respondent filed before RTC of Mandaluyong a process would result.
Complaint for Collection of Sum of Money and Damages with
Prayer for Issuance of Writ of Attachment against PEIA and  All essential elements of Cause of Action are present
PEIP
o Stipulation as to venue of prospective action does not
• Respondent filed Ex Parte Motions for Issuance of preclude the filing of the suit in the residence of Respondent
Summons and for Leave of Court to Deputize Respondent’s under Rule 4.2
General Manager Richard Tee to serve summons outside of
the PH. This was granted by RTC. Alias Summons was issued o Full blown trial is necessary
• Petitioner filed Petition for Certiorari under Rule 65 o Respondent’s prayer in its amended complaint for
with TRO and or Preliminary Injunction with CA. CA affirmed issuance of writ of attachment over shares of stock in PEIP
RTC was DENIED, shares of stock in PEIP had NOT been atttached

• Extraterritorial service of summons is not valid


because the case involves collection of sum of money and
1. W/N service of summons was proper and RTC acquire damages, action in personam which is neither related nor
jurisdiction over the person of the Petitioner – NO, there was connected to any property of petitioner to which it claims lien or
no valid summons served upon petitioner and RTC interest.
erroneously exercised jurisdiction over its person
• Petitioner did not voluntarily appear or submit to the
Petitioner: court’s authority as it was consistent in all its pleadings
assailing service of summons and jurisdiction of the RTC, thus
• Case involves action for collection of sum of money it is not in estoppel when it filed an Answer with compulsory
and damages arising from the alleged breach of the counterclaim. It had no other choice but to file an answer
Distribution Agreement (in personam) otherwise RTC would have declared petitioner to waive its right
to file responsive pleadings. Compulsory counterclaim cannot
• Personal service is proper and not extraterritorial be considered as voluntary appearance. Petitioner only sought
service of summons which is only proper in in rem and quasi in damages and atty’s fees as a consequence of the unfounded
rem cases suit filed by respondent. Compulsory counterclaim is consistent
with position on RTC’s lack of jurisdiction
• Allegations in the Amended Complain that petitioner
has personal properties in the PH does not make this case one • While RTC has no jurisdiction over respondent’s
that relates to, or the subject of which is, property within the complaint, it has jurisdiction over the counterclaim as it can be
Philippines to warrant extraterritorial service. treated as a separate action.

o For this to be considered as one that relates to, or the • Although other grounds for Motion to Dismiss was
subject of which is property within the Philippines, the main raised by petitioner, it is not voluntary appearance.
subject matter of the action must be property within the PH
itself. o De Midgely held that MTD with grounds other than
lack of jurisdiction over the person of the defendant with prayer
• Prayer in the Amended Complaint for issuance of writ for “other reliefs” is voluntary appearance
of attachment over personal property of PEIP (99% owned by
Petitioner as the supposed successor of PEIA) did not convert o De Midgely is superseded by La Naval Drug
it to quasi in rem. Corporation v CA: estoppel by jurisdiction must be unequivocal
and intentional.
• Service of Summons is NOT valid, RTC has no
jurisdiction o Allegation of grounds other than lack of jurisdiction
over the person of the defendant with prayer for “other reliefs”
SC: is NOT considered as unequivocal and intentional estoppel.
Rule 14.20 Voluntary appearance - last sentence
• For the court to have authority to dispose of the case
on the merits, it must acquire jurisdiction over the subject 2. W/N cause of action exists against Petitioner in
matter and the parties. Courts acquire jurisdiction over the Respondent’s Amended Complaint - YES
plaintiffs upon the filing of the complaint. Courts acquire
jurisdiction over the defendants either through service of Petitioner:
summons as required by law or through voluntary appearance
and submission to authority of the courts. Proper service of • CA should have granted their petition for certiorari on
summons depends on the nature of the civil case: whether in ground of GAD of RTC in refusing to dismiss Amended
personam, in rem or quasi in rem Complaint for failure to state cause of action

• When the defendant or respondent does not reside • Never used name of PEIA as its corporate name and
and is not found in the Philippines and the action involves in did not change its name from that of PEIA
personam, Philippine courts cannot try the case against them
because of impossibility of acquiring jurisdiction over his • PEIA is entirely different corporate entity
person unless he voluntarily appears in court
• Assuming arguendo that petitioner is real party in
• Rule 14.15 requires not mere allegation of existence interest or that they are one and the same entity, still failed to
of personal property belonging to non-resident defendant but state cause of action because the Distribution Agreement
that the personal property located in the PH must have been expressly grants PEIA right to terminate contract at any time
actually attached. Respondent’s allegation that petitioner had
personal property in the PH in the form of shares of stock in SC:
PEIP does not convert the case from in personam to in rem.
• RTC was correct: When a motion to dismiss is
o Venturanza v CA: when attachment was void from the grounded on failure to state a cause of action, ruling there
beginning, the action in personam was never converted to in should be based solely on the facts alleged in the complaint,
rem assuming them to be true otherwise procedural error and
denial of plaintiff’s right to due process would result.
• There are exceptions to the rule but none of the ISSUE:
exceptions apply in this case.
Whether or not the CA committed an error of law in holding
• Defense of petitioner that it was not a real party in that GSIS’s counterclaim of rentals collected by the Caballero’s
interest is evidentiary and must be proven in trial against CMTC is in the nature of a permissive counterclaim
which required the payment of GSIS of docket fees before the
Trial Court can acquire jurisdiction over the said counterclaim.

3. W/N venue is proper for Respondent’s civil case against


petitioner - YES
HELD
Petitioner:
YES. The test was also established by the Supreme Court in
• Both Respondent and PEIA mutually agreed in the this case to determine whether a counterclaim is compulsory or
Distribution Agreement to the exclusive jurisdiction of courts of not. The Court has devised the following tests: (a) Are the
Singapore or Philippines as elected by PEIA. Absent any issues of fact and law raised by the claim and by the
waiver from PEIA, Complaint filed by Respondent before RTC counterclaim largely the same? (b) Would res judicata bar a
in the Philippines should be dismissed for improper venue subsequent suit on defendant's claims, absent the compulsory
counterclaim rule? (c) Will substantially the same evidence
SC: support or refute plaintiff's claim as well as the defendant's
counterclaim? and (d) Is there any logical relation between the
• Despite venue stipulation in the Distribution claim and the counterclaim? A positive answer to all four
Agreement, RTC of the PH cannot be considered as improper questions would indicate that the counterclaim is compulsory.
venue as the stipulation of venue was alternative
Tested against the above-mentioned criteria, the SC agreed
• Civil Case is dismissible for RTC never acquired with the CA's view that GSIS's counterclaim for the recovery of
jurisdiction over the person of the petitioner the amount representing rentals collected by Fernando from
the CMTC is permissive. The evidence needed by Fernando to
cause the annulment of the bid award, deed of absolute sale
and TCT is different from that required to establish GSIS's
GSIS v CABALLERO claim for the recovery of rentals.

FACTS: The issue in the main action, i.e., the nullity or validity of the
bid award, deed of absolute sale and TCT in favor of CMTC, is
Fernando and his wife, Sylvia Caballero, secured a mortgage entirely different from the issue in the counterclaim, i.e.,
secured by their residential lot from petitioner Government whether GSIS is entitled to receive the CMTC's rent payments
Service Insurance System (GSIS) in the amount of P20,000.00. over the subject property when it (GSIS) became the owner of
However, Fernando defaulted on the payment of his loan with the subject property by virtue of the consolidation of ownership
the GSIS. GSIS wrote a letter to Fernando, informing him of of the property in its favor.
the consolidation of title in its favor, and requesting payment of
monthly rental in view of Fernando's continued occupancy of The rule in permissive counterclaims is that for the trial court to
the subject property. Negotiation as to repurchase also takes acquire jurisdiction, the counterclaimant is bound to pay the
place. prescribed docket fees. This, GSIS did not do, because it
asserted that its claim for the collection of rental payments was
GSIS scheduled the subject property for a 2nd public bidding a compulsory counterclaim. Since petitioner failed to pay the
after a failed negotiation with Fernando to buy back his docket fees, the RTC did not acquire jurisdiction over its
property. In this bidding, Jocelyn Caballero, Fernando’s permissive counterclaim. The judgment rendered by the RTC,
daughter submitted a bid but unfortunately defeated by CMTC. insofar as it ordered Fernando to pay GSIS the rentals which
With this, Fernando, filed with the Regional Trial Court (RTC) he collected from CMTC, is considered null and void. Any
of Kabacan, Cotabato a Complaint against CMTC, the GSIS decision rendered without jurisdiction is a total nullity and may
and its responsible officers Fernando prayed, among others, be struck down at any time, even on appeal before this Court.
that judgment be rendered: declaring GSIS Board of Trustees
Resolution No. 199, dated May 16, 1989, null and void for the RULE 6
irregularities in the conduct of the bidding. Section 2. Pleadings allowed. — The claims of a party
are asserted in a complaint, counterclaim, cross-claim, third
GSIS and its officers filed their Answer with Affirmative (fourth, etc.)-party complaint, or complaint-in-intervention.
Defenses and Counterclaim. GSIS alleged that Fernando owed
of P130,365.81, representing back rentals, including additional The defenses of a party are alleged in the answer to the
interests from January 1973 to February 1987, and the pleading asserting a claim against him.
additional amount of P249,800.00. Caballero, on the other
hand, alleged that GSIS's counterclaim is permissive and its An answer may be responded to by a reply. (n)
failure to pay the prescribed docket fees results into the
dismissal of its claim. Section 2. Pleadings allowed. — The claims of a party
are asserted in a complaint, counterclaim, cross-claim, third
After trial, the RTC, in its Decision, 1994, ruled in favor of GSIS (fourth, etc.)-party complaint, or complaint-in-intervention.
and dismissed the complaint. In the same decision, the trial
court granted GSIS's counterclaim and directed Fernando to The defenses of a party are alleged in the answer to the
pay GSIS the rentals paid by CMTC in the amount of pleading asserting a claim against him.
P249,800.00.
An answer may be responded to by a reply. (n) not have done had they known that the land is covered by a
patent, should be adjudged to pay ..."
RULE 9
Section 2. Compulsory counterclaim, or cross-claim, (5) The warranty undertaken by Marta B. Chivi, judging
not set up barred. — A compulsory counterclaim, or a cross- by its terms and by the surrounding circumstances was in
claim, not set up shall be barred. (4a) respect of the transfer of ownership - not of the registered title -
to the Laicos. The action filed by the Sierras was not for
RULE 11 recovery of such ownership but for the exercise of their alleged
Section 4. Answer to counterclaim or cross-claim. — A right of repurchase under the Public Land Act on the ground
counterclaim or cross-claim must be answered within ten (10) that the land they had sold was covered by a patent title. In
days from service. (4) other words, the filing of the action did not militate against the
warranty to transfer title, for the very fact that the plaintiffs
Section 8. Existing counterclaim or cross-claim. — A wished to enforce their alleged right of repurchase was
compulsory counterclaim or a cross-claim that a defending predicated on the assumption that the title, that is, ownership,
party has at the time he files his answer shall be contained had been effectively transferred first to Chivi an subsequently
therein. (8a, R6) by the latter to the Laicos.

Section 9. Counterclaim or cross-claim arising after (6) In any event, even viewing the situation in the light
answer. — A counterclaim or a cross-claim which either most favorable to the Laicos, their cross-claim on Chivi's
matured or was acquired by a party after serving his pleading warranty to deliver title to them was so inextricably linked with
may, with the permission of the court, be presented as a and so utterly dependent upon the success of the complaint of
counterclaim or a cross-claim by supplemental pleading before the Sierras for the repurchase of the land that when the
judgment. (9, R6) complaint was dismissed the cross-claim could not possibly
survive. For as the cross-claimants themselves alleged, the
Section 10. Omitted counterclaim or cross-claim. — cross-defendants would be liable on the warranty "should the
When a pleader fails to set up a counterclaim or a cross-claim plaintiffs finally obtain favorable judgment in their favor" (sic).
through oversight, inadvertence, or excusable neglect, or when The warranty became functus oficio after the Sierras, who
justice requires, he may, by leave of court, set up the turned out after all to have a free patent title to the land issued
counterclaim or cross-claim by amendment before judgment. way back in 1932, agreed to transfer and did transfer said title
(3, R9) to the Laicos - first by the deed of sale executed directly in their
favor by the Sierras on January 17, 1960, and again in the
amicable settlement of the case between them. The fact that
TORRES V CA the Laicos paid P10,000.00 to the Sierras in that amicable
settlement created no liability on the part of the Chivis: first,
The principal issue in this case is: Could the cross-claim in this because the latter neither knew nor consented to such
particular action stand after the complaint in the same action settlement; second, because the Laicos had already acquired
was dismissed with prejudice? the land directly, from the Sierras by virtue of the aforesaid
sale of January 17, 1960; and third because the said sum of
In the resolution of this issue the following considerations are P10,000.00 was not the subject of the cross-claim against
pertinent:chanrobles virtual law library them.

(1) A cross-claim, as defined in Section 7 of Rule 6 is Apropos is the following statement of the legal principle:
"any claim by one party against a co-party arising out of the
transaction or occurrence that is the subject matter either of A cross-bill strictly speaking is one brought by a defendant in
the original action or of a counterclaim therein." an equity suit against ... other defendants in the same suit,
touching the matters in question in the original bill. It is
(2) The cross-claim of the Laicos against the Chivis was considered as an auxiliary suit dependent upon the original bill,
for the recovery of the sum of P51,294.00, upon the allegations and can be sustained only on matters growing out of the
that according to the contract of sale between them, "should original bill. There is a well-defined distinction between a cross-
the defendants Chivi fail to transfer the title to the land in bill merely defensive in character, and one seeking affirmative
question to the VENDEE (defendant Laico) then the former relief. The dismissal of the original bill carries with it a purely
shall return to the latter (the aforesaid sum) which is double the defensive cross-bill but not one seeking affirmative relief.
amount of the purchase price received by the defendants
Chivi;" and that "the defendants Chivi are/or will be liable on The cross-claim in this case was purely defensive in nature. It
these warranties and conditions should the plaintiffs (Sierras) arose entirely out of the complaint and could prosper only if the
finally obtain favorable judgment in their favor" (sic). plaintiffs succeeded. Hence, under the principle above
enunciated, it could not be the subject of independent
(3) When Marta B. Chivi sold her "rights and interests" to adjudication once it lost the nexus upon which its life depended.
the land in question to the Laicos on 24 May 1958 the latter
knew that Chivi had yet no registered title, and in fact Under the circumstances above set forth the dismissal of the
substituted her in the registration proceeding which she had cross-claim should have followed the dismissal of the
initiated. complaint as a matter of course, without further proceeding;
and in setting the said cross-claim for pre-trial and receiving
(4) In their counterclaim for damages against the Sierras evidence thereon and then rendering judgment against the
in Civil Case No. 6184, the Laicos alleged that the "plaintiffs, in cross-defendants the court committed such a grave abuse of
fraudulently misrepresenting to the defendants Chivi, as well discretion amounting to lack of jurisdiction correctible by
as to the defendants Laico, that the land in question is certiorari.
unregistered and is not covered by a patent, thereby inducing
the latter to purchase the land in question, which they would
Concerning the argument that the respondents here were the Court of Appeals. Docketed as CA-GR No. 17013, this
guilty of laches because they filed their petition for certiorari petition prospered. On September 28, 1990, the respondent
after the lapse of over 9 months from the time judgment of the court annulled the dismissal of the complaint by the trial court
Court of First Instance was rendered, respondent Court of and ordered its reinstatement.
Appeals ruled - in our opinion correctly - as follows:
Issue: WON Orbeta spouses, as cross-claimants in the original
To the contention that the petitioners' action is barred laches, complaint, could still appeal its dismissal in their petition for
we are bound to disagree. The judgment by default was review
rendered on February 5, 1965. It is not known when the
petitioners received copy of this judgment, but the fact is that NO. The most important reason is that the order of dismissal
on April 13, or after the lapse of only 2 months and 7 days from issued by the trial court had already become final and
rendition of the judgment, the petition for certiorari was filed executory at the time it was sought to be reversed. The
with this Court. Principally, the petition assails the decision and reglementary period for appealing it had already lapsed when
the writ of execution thereof which was issued on April 1. the Crisologos filed their petition for certiorari under Rule 65.
Assuming that the decision complained of was actually This was correctly dismissed by the Court of Appeals on the
received by the petitioners on the date it was rendered, the ground, as earlier stated, that the special civil action was not a
intervening period to the filing of the petition is only 2 months substitute for a lost appeal.
and 7 days, which is shorter than the shortest period of 2
months and 26 days cited in the respondents' ex-parte motion When the Orbetas filed their own petition on March 6, 1989, it
for reconsideration in support of their theory of laches. And a was also after the order they were questioning had already
mere 12 days intervened between the issuance of the writ of become unappealable. On this score alone, the present
execution and the filing of the petition for certiorari. petition must fail. Even as the petition of the plaintiffs
themselves had been earlier dismissed, similar treatment
Parenthetically, this Court would like to state that Judge should have been given to the petition of the Orbetas, who
Guillermo Torres should not have been made to appear as were appealing only as cross-claimants.
active party-petitioner in this case, his participation having
become functus oficio after the rendered judgment, and A cross-claim is any claim by one party against a co-party
therefore his role being purely nominal in this petition. arising out of the transaction or occurrence that is the subject
matter either of the original action or of a counter-claim therein.
In view of the foregoing considerations, the judgment of the Such cross-claim may include a claim that the party against
Court of Appeals is affirmed, without pronouncement as to whom it is asserted is or maybe liable to the cross-claimant for
costs. all or part of a claim asserted in the action against the cross-
claimant. 7
RUIZ v CA
The cross-claim in this case stemmed from the alleged unjust
Facts: On September 12, 1976, the Crisologo family donated refusal of the donees to return the donated properties, resulting
an island to the Sent of God Foundation on the condition inter in the Crisologos filing their complaint for revocation of the
alia that it would "be used exclusively to provide a monastic life donations. In their cross-claim, the Orbetas alleged that they
and experience according to the Rule of St. Benedict and for were dragged into the controversy because of the conduct of
such other religious and charitable purposes as may be the petitioners. Their contention was that they would not have
determined by the donee." This was followed by a later been sued at all were it not for the failure of the petitioners to
donation of other lands, under the same conditions. The comply with the conditions of the donations.
subject properties were later transferred by the Foundation to
the S of G Foundation Inc., which introduced improvements It is clear that the cross-claim arose from the complaint of the
thereon that, for reasons we do not need to examine here, it Crisologos and was not separable from that main action. It had
later demolished. On July 29, 1988, believing that the no independent existence and was based entirely on that
conditions of the donations had been violated, the Crisologos complaint. The cross-claim was defensive in character
filed a complaint for revocation of the donations and the because it could prosper only if the plaintiffs succeeded. As the
recovery of the properties donated. 1 Impleaded as defendants plaintiffs failed to establish that the petitioners' refusal was not
were the Sent of God Foundation, the S of G Foundation, Inc., justified, it necessarily followed that the private respondents'
Raul G. Fores, Senen F. Valero, and Father Odon de Castro, own cross-claim, which was based on the same allegation,
the last three as officers of the foundations. Also included were also had to fail.
Olegario Orbeta and his wife, Susana Rosario Orbeta, for their
role in facilitating the donations. The cross-claimants cannot claim more rights than the plaintiffs
themselves, on whose cause of action the cross-claim
Defendants resisted the allegations in the complaint and depended. The dismissal of the complaint divested the cross-
denied that the conditions of the donations had been violated. claimants of whatever appealable interest they might have had
2 For their part, the Orbeta spouses confessed judgment in before and also made the cross-claim itself no longer viable.
their answer but also filed a cross-claim for damages against
the other defendants for involving them in the litigation. TAN v DIMAYUGA

The other defendants filed a motion to dismiss the complaint Facts: Soledad Tan filed with the court of First Instance of
on the ground that it did not state a cause of action and that Rizal, suit for damages against Carlos Dimayuga, as a result of
only the S of G Foundation was a real party-in-interest. The physical injuries sustained by her while being a passenger of a
trial court issued an order 4 dismissing the complaint for lack of Circle taxicab owned by the latter. Dimayuga filed a motion for
a cause of action. leave to file a third party complaint, bringing in as third party
defendant Walter Mason, whose car driven by him had a
The Orbeta spouses, who had not joined the Crisologos in CA- collision with the aforesaid taxicab that caused the injuries
GR No. 16837, filed their own petition for certiorari, also with sustained by Soledad Tan. Summons were served to Tan.
Mason filed a "Motion to Dismiss the Third Party Complaint," default. As correctly pointed out by the lower court, to allow the
containing a request to "set it for the consideration of the court cross-claim to remain would be tantamount to setting aside the
on January 11, or as soon as the court minded to entertain the order of default the cross-claimant, who had been previously
same." declared default, would re-obtain a standing in court as party
litigant.
Dimayuga filed a motion to declare third party defendant
Walter Mason in default, on the alleged ground that the Rule 6, ROC
reglementary period of fifteen days within which he should file Section 11. Third, (fourth, etc.)—party complaint. — A
his answer to the third party complaint had already expired and third (fourth, etc.) — party complaint is a claim that a defending
he had not yet filed his answer thereto. Acting on this motion, party may, with leave of court, file against a person not a party
and still unaware of Mason's motion to dismiss, the court, on to the action, called the third (fourth, etc.) — party defendant
January 14, 1958, issued an order declaring him in default. for contribution, indemnity, subrogation or any other relief, in
respect of his opponent's claim.
Soledad Tan, with leave of court, filed an amended complaint
containing an alternative prayer for judgment in her favor and RSP
against either defendants Dimayuga or Mason. Sec. 19. Prohibited pleadings and motions. — The following
pleadings, motions or petitions shall not be allowed in the
Mason filed his answer to the amended complaint, including cases covered by this Rule: chanrobles virtual law library
therein a counterclaim against Soledad Tan, a cross-claim
against Carlos Dimayuga, and a third party complaint against (a) Motion to dismiss the complaint or to quash the complaint
Vicente Escalona, the driver of the taxicab owned by or information except on the ground of lack of jurisdiction over
Dimayuga. On the following day, realizing that he had filed a the subject matter, or failure to comply with the preceding
third party complaint against Escalona without court permission, section;
Mason filed a motion for leave to file said pleading. The motion
was granted. (b) Motion for a bill of particulars;

Dimayuga filed two motions: (1) to strike out Mason's for (c) Motion for new trial, or for reconsideration of a judgment, or
motion for leave to file third party complaint; and (2) to dismiss for opening of trial;
the cross-claim filed against him, which were granted.
(d) Petition for relief from judgment;
ISSUE: WON Mason’s cross claim should be dismissed
(e) Motion for extension of time to file pleadings, affidavits or
YES. It must be remembered, in the first place, that the order any other paper; chanrobles virtual law library
of default was rendered on January 14, 1958. For its setting
aside, defendant-appellant's remedy should have been a (f) Memoranda;
petition for relief under Rule 38 of the Rules of Court, filed
within sixty days after he learned of the order and not more (g) Petition for certiorari, mandamus, or prohibition against any
than six months after such order was entered (section 3). The interlocutory order issued by the court;
record, however, discloses that there was no such petition for
relief filed, but that the first time Mason made prayer to set (h) Motion to declare the defendant in default; chanrobles
aside the default order was on December 16, 1958 in his virtual law library
"Petition and Motion for Reconsideration" of the order quoted
above. Even granting for the sake of argument that this petition (i) Dilatory motions for postponement;
should be regarded as one for relief, still the order of default
could no longer be reopened because said petition was filed (j) Reply;
eleven months after the entry of said order, clearly beyond the
reglementary period provided for under section 3 of Rule 38. (k) Third party complaints;

Having thus neglected to have the order of default vacated, (l) Interventions.
appellant lost every right to expect that his motion to dismiss
Dimayuga's third party complaint would be acted upon by the RSC
lower court. Furthermore, there is showing that Mason was SEC. 14. Prohibited Pleadings and Motions. — The following
somewhat heedless about the said motion of January 3, 1958. pleadings, motions,
As already stated, it contained a request to set it for hearing. or petitions shall not be allowed in the cases covered by this
Dimayuga, with his lawyer, appeared in court on that date, Rule:
January 11, but neither Mason nor his attorney appeared. A (a) Motion to dismiss the complaint;
search in the record by the clerk of court and Dimayuga's (b) Motion for a bill of particulars;
lawyer revealed no pleading, or motion coming from Mason. (c) Motion for new trial, or for reconsideration of a judgment, or
From these allegations, it would appear that Mason did not see for
to it that his pleading has reached the court. If he were sincere reopening of trial;
in asking that his motion to dismiss be considered or heard on (d) Petition for relief from judgment;
January 11, 1958, he or counsel should have appeared in (e) Motion for extension of time to file pleadings, affidavits, or
court on that very date, for the proposed hearing, or at least to any other
find out if the motion was already with the court. paper;
(f) Memoranda;
Consequently, the lower court did not commit a mistake in (g) Petition for certiorari, mandamus, or prohibition against any
dismissing Mason's cross-claim contained in his answer interlocutory order issued by the court;
whereby Dimayuga was cross-defendant. It is worthy note that (h) Motion to declare the defendant in default;
said cross-claim was filed after the appellant was declared in (i) Dilatory motions for postponement;
(j) Reply; the Surety even orally moved "for the postponement of the
(k) Third-party complaints; and production of respondent Po Kee Kam," which motion was
(l) Interventions. denied in the order of December 14, 1962 of the Deportation
Board. It would have been pointless to ask for postponement to
produce the person of Po Kee Kam, if the Surety did not
REPUBLIC V CENTRAL SURETY receive notice to that effect. At all events, the trial court found
that the Surety and Mangoba "were duly notified to produce the
Facts: Republic of the Philippines (hereinafter referred to as said Po Kee Kam before the Deportation Board on December
the Republic) filed suit against the Central Surety & Insurance 14, 1962, but the said Po Kee Kam failed to appear."
Company (hereinafter referred to as the Surety) and the latter's
manager of the bond department, Casimiro Mangoba. The WON Court had jurisdiction
Surety executed in favor of the Deportation Board a bond in
the amount of P5,000 for the temporary release of Po Kee YES. It is not disputed that the trial court acquired jurisdiction
Kam, a Chinese citizen and respondent in deportation over the subject-matter on June 20, 1963 when the complaint
proceeding No. 730, subject to certain conditions, principal was filed with it. It is of no moment that summons was served
among which are that the Surety undertakes to have Po Kee and that the case was heard and decided after the effectivity of
Kam available at all times to the Deportation Board within 24 Republic Act 3828, because the rule is firmly entrenched in our
hours from notice, that Po Kee Kam shall be personally law that jurisdiction once acquired continues until the case is
present before the Deportation Board at all hearings in the finally terminated.
case, and that upon his failure to comply with any of the above rd
conditions, the bond shall be automatically confiscated and WON Court had jurisdiction over the 3 party complaint
forfeited in favor of the Government. Po Kee Kam failed to
appear. Prayer is made that judgment be rendered sentencing YES. Third-party complaint is an ancillary suit which depends
the Surety and Mangoba to pay, jointly and severally, to the on the jurisdiction of the court over the main action. Since the
Republic the amount of P5,000, with interest at the legal rate trial court had acquired jurisdiction over the complaint, it
from the filing of the complaint until full payment, and the sum necessarily follows that it likewise had jurisdiction over the
of P1,000 as attorney's fees and litigation expenses, plus costs. third-party complaint which is but an incident thereof. This must
be so because jurisdiction over the main case embraces all
Surety filed its answer, interposing inter alia, the defenses (1) incidental matters arising therefrom and connected therewith.6
that its bond cannot be made liable beyond the amount of A contrary rule would result in "split jurisdiction" which is not
P5,000; (2) that it is not liable for attorney's fees in the absence favored,7 and in multiplicity of suits, a situation obnoxious to
of any stipulation to that effect; (3) that the court has no the orderly administration of justice.8 The court acquired
jurisdiction over the case as the amount involved is only jurisdiction over the third-party complaint, provided it had
P5,000; and (4) that the Republic has no cause of action. jurisdiction over the main case, for the reason that the third-
party complaint is but a continuation thereof, its purpose being
Mangoba's answer, filed on July 11, 1963, makes substantially to seek "contribution, indemnity, subrogation or any other relief,
the same averments and interposes the same defenses as in respect to his opponent's claim."
those contained in the Surety's answer. In addition, he
disclaims personal liability under the bond. NOTE: The Surety prays for the remand of the third-party
complaint to the trial court for further proceedings. It is our view
On July 30, 1963 the Surety filed a third-party complaint, with that under the environmental circumstances, there is no need
leave of court, against Po Kee Kam and Tony Go (hereinafter to do so. The third-party defendants did not specifically deny
referred to as the third-party defendants), alleging that the the execution of the indemnity agreement. They merely
Republic filed a complaint against it on the basis of a surety expressed insufficient knowledge and information to form a
bond in the amount of P5,000 issued in behalf of Po Kee Kam belief as to the veracity thereof, without setting forth "the
in favor of the Deportation Board; that for and in consideration substance of the matters" upon which they rely to support their
of the issuance of the said bond, the third-party defendants, denial as required by the Rules.
jointly and severally, executed an indemnity agreement in favor
of the Surety to indemnify it for damage, loss, costs, payments, SAMALA V VICTOR
advances and expenses of whatever kind and nature which it
might at any time incur as a consequence of having executed Facts: Emerita C. Jumanan, assisted by her husband Ricardo
the said bond. Prayer is made that in the event judgment is Jumanan, filed before the CFI of Cavite a complaint for
rendered against it, the third party defendants be ordered, damages arising from physical injuries suffered by her as a
jointly and severally, to reimburse it whatever amount it may be passenger of the jeepney bearing plate No. PUJ-VY-542 '75
adjudged to pay to the Republic, plus interest at the rate of 12% allegedly owned and operated by the four-named defendants,
per annum, compounded quarterly, from the filing of the spouses Felisa and Tomas Garcia, Emetiquio M. Jarin and
complaint until the whole obligation is fully paid, 15% of the Juanita Madlangbayan, and driven by the last named
total amount due as attorney's fees, and costs. defendant, Virgilio Profeta.

Trial court rendered judgment, ordering the surety to pay to the


Republic the sum of P5,000, with interest thereon at the legal
rate from the date of the filing of the complaint until the whole In their separate answers, both Jarin and Madlangbayan
amount shall have been paid, plus costs, and absolving denied liability, claiming they no longer owned the passenger
Mangoba from the complaint. jeepney at the time of the incident in question, said ownership
having been transferred to the spouses Garcia. While admitting
WON Surety is liable for the bond to be the owners of the passenger jeepney, the spouses
Garcia nonetheless denied liability, alleging that the vehicular
YES. Evidence unequivocally shows that the Surety received collision complained of was attributable to the fault and
notice to produce the person of Po Kee Kam; in point of fact negligence of the owner and driver of the Saint Raphael
Transit passenger bus with plate No. XGY-297 PUB- Phil. '75. thereafter taken to the National Orthopedic Hospital in which
Consequently, a third-party complaint was filed by defendants underwent several operations.
spouses Garcia and Virgilio Profeta against Purificacion
Samala and Leonardo Esguerra, owner and driver, In view of financial constraints, Paras filed a complaint for
respectively, of the Saint Raphael Transit Bus. The latter damages based on breach of contract of carriage against
defendants, in turn, filed a fourth-party complaint against the Inland to which it denied responsibility, by alleging, among
insurer of the Saint Raphael Transit Bus, Imperial Insurance, others, that its driver Coner had observed an utmost and
Inc., which was declared in default for failure to appear at the extraordinary care and diligence to ensure the safety of its
pre-trial conference. passengers.

Trial court ruled in favor of defendants. Upon leave of court, Inland filed a third-party complaint against
Philtranco and Apolinar Miralles (Third Party defendants). In
WON third-party complaint may not prosper this third-party complaint, Inland, sought for exoneration of its
liabilities to Paras, asserting that the latter’s cause of action
NO. A person not a party to an action may be impleaded by the should be directed against Philtranco considering that the
defendant either (a) on an allegation of liability to the latter; (b) accident was caused by Miralles’ lack of care, negligence and
on the ground of direct liability to the plaintiff-, or, (c) both (a) reckless imprudence. In support of it, Inland invoked the Police
and (b). The situation in (a) is covered by the phrase "for Investigation Report which established the fact that the
contribution, indemnity or subrogation;" while (b) and (c) are Philtranco bus driver, Apolinar Miralles was the one which
subsumed under the catch all "or any other relief, in respect of violently bumped the rear portion of the Inland bus, and
his opponent's claim." therefore, the direct and proximate cause of Paras’ injuries.

The case at bar is one in which the third party defendants are The RTC ruled in favor of Paras and held that Philtranco and
brought into the action as directly liable to the plaintiffs upon Apolinar Miralles jointly and severally liable for actual and
the allegation that "the primary and immediate cause as shown moral damages including attorney’s fees.
by the police investigation of said vehicular collision between
(sic) the Above-mentioned three vehicles was the recklessness On appeal to the CA, it affirmed the RTC’s ruling that no trace
and negligence and lack of imprudence (sic) of the third-party of negligence at the time of the accident was attributable to
defendant Virgilio (should be Leonardo) Esguerra y Ledesma Inland’s driver, rendering Inland not guilty of breach of contract
then driver of the passenger bus." The effects are that "plaintiff of carriage.
and third party are at issue as to their rights respecting the
claim" and "the third party is bound by the adjudication as WON Paras could recover considering that Philtranco was only
between him and plaintiff." It is not indispensable in the being subrogated for Inland
premises that the defendant be first adjudged liable to plaintiff
before the third-party defendant may be held liable to the YES. Impleading Philtranco and its driver through the third-
plaintiff, as precisely, the theory of defendant is that it is the party complaint filed on March 2, 1990 was correct. The device
third party defendant, and not he, who is directly liable to of the third-party action, also known as impleader, was in
plaintiff. The situation contemplated by appellants would accord with Section 12, Rule 6 of the Revised Rules of Court,
properly pertain to situation (a) above wherein the third party the rule then applicable, viz:
defendant is being sued for contribution, indemnity or
subrogation, or simply stated, for a defendant's "remedy over". Section 12. Third-party complaint. – A third-party complaint is a
claim that a defending party may, with leave of court, file
It is immaterial that the third-party plaintiff asserts a cause of against a person not a party to the action, called the third-party
action against the third party defendant on a theory different defendant, for contribution, indemnity, subrogation or any other
from that asserted by the plaintiff against the defendant. It has relief, in respect of his opponent’s claim.
likewise been held that "a defendant in a contract action may
join as third-party defendants those liable to him in tort for the The requisites for a third-party action are, firstly, that the party
plaintiff s claim against him or directly to the plaintiff. to be impleaded must not yet be a party to the action; secondly,
that the claim against the third-party defendant must belong to
PHILTRANCO v PARAS the original defendant; thirdly, the claim of the original
defendant against the third-party defendant must be based
Facts: Felix Paras is engaged in the buy and sell of fish upon the plaintiff’s claim against the original defendant; and,
products. Sometime on his way home to Manila from Bicol fourthly, the defendant is attempting to transfer to the third-
Region, he boarded a bus owned and operated by Inland party defendant the liability asserted against him by the original
Trailways, Inc. and driven by its driver Calvin Coner. plaintiff.

While the said bus was travelling, it was bumped at the rear by As the foregoing indicates, the claim that the third-party
another bus owned and operated by Philtranco Service complaint asserts against the third-party defendant must be
Enterprises, Inc. As a result of the strong and violent impact, predicated on substantive law. Here, the substantive law on
the Inland bus was pushed forward and smashed into a cargo which the right of Inland to seek such other relief through its
truck parked along the outer right portion of the highway and third-party complaint rested were Article 2176 and Article 2180
the shoulder. Consequently, the said accident bought of the Civil Code, which read:
considerable damage to the vehicles involved and caused
physical injuries to the passengers and crew of the two buses, Article 2176. Whoever by act or omission causes damage to
including the death of Coner. another, there being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if there is no pre-
Paras was not spared from the effects of the accident. He was existing contractual relation between the parties, is called a
taken for an emergency treatment in the nearby hospital and quasi-delict and is governed by the provisions of this chapter.
(1902a)
Article 2180. The obligation imposed by article 2176 is and/or failed to execute the contemplated deed of sale the trial
demandable not only for one’s own acts or omissions, but also court rendered the judgment by default against Mariano Flores.
for those of persons for whom one is responsible. Paras’ cause That the cause of action or claim of Pilar Bautista, as third
of action against Inland (breach of contract of carriage) did not party plaintiff, against Mariano Flores, as third party defendant,
need to be the same as the cause of action of Inland against did not depend upon the outcome of the principal action
Philtranco and its driver (tort or quasi-delict) in the impleader. It (Pascual vs. Bautista and the Lovinas) is evident from the
is settled that a defendant in a contract action may join as nature of the claims involved therein
third-party defendants those who may be liable to him in tort for
the plaintiff’s claim against him, or even directly to the plaintiff. WON third party complaint may prosper

The third-party claim need not be based on the same theory as YES. Whether or not the filing of the third party complaint was
the main claim. proper can not now be raised by, nor be invoked in favor of
Pilar Bautista, because it was she precisely who filed it.
Pascual v Bautista Moreover, it is clear from the provisions of the Rules of Court
that for a claim to be properly raised in a pending action by
Facts: This is an appeal taken by Mariano R. Flores from the way of third party complaint, it is not necessary that it be one
decision of the Court of First Instance of Manila. It appears that arising from entirely dependent upon the main action; it is
in Civil Case No. 5203 of the Court, of First Instance of Manila enough that it be "in respect" of the claim of third party
entitled "Wenceslao Pascual vs. Pilar Bautista, Primitivo Lovina, plaintiff's opponent (Rule 6, Section 12, Rules of Court), or that
Nelly Montilla de Lovina and Leon Yambao", the first (appellee it be "connected with plaintiff's claim" (Capayas vs. Court of
herein) filed, with leave of court, a third-party complaint against First Instance of Albay 43 O.G. 2071, 2074; U.S. Commercial
Mariano R. Flores (appellant herein). Having failed to answer Company vs. Macario Guevarra, et al., 48 O.G. pp. 612-613).
the third-party complaint, Flores was declared in default (Rec.
on appeal, pp. 19-20, 40-41) and, after due trial of the whole COC v Cloribel
case, the court, on March 7, 1951, rendered judgment. All the
parties above-mentioned, except the third-party defendant WON respondent court gravely abused its discretion in
Flores, appealed from the above decision to the Court of allowing the filing of and in admitting the third-party complaint
Appeals (CA-G.R. 7878-R), appellee Pilar Bautista, from the of the Cochingyans.
portions thereof adverse to her and in favor of the plaintiff. In
its decision of February 16, 1953, the Court of Appeals YES. Civil Case No. 52318 was a special civil action for
modified the appealed decision "by eliminating from it the declaratory relief under Rule 66 of the Rules of 1940 which
award of damages in favor of Wenceslao Pascual against Pilar were in force when it was filed. The only purpose thereof was
Bautista and Primitivo Lovina and Nelly Montilla de Lovina, as to secure from the court the proper interpretation or
solidary debtors; and substituting, in its stead, an award in construction of the reparations contract between the
favor of Wenceslao Pascual in the total sum of P15,181.86, to Reparations Commission and Warvets in regard to the rate of
be paid by Pilar Bautista alone. In all other respects the conversion of the dollar to the peso of the purchase price
judgment of the Court below is affirmed. Pilar Bautista secured Warvets had to pay No positive or affirmative, much less any
the corresponding writ to execute the decision rendered in her material relief, was 'using sought therein. Indeed, it is in the
favor in Civil Case No. 5203 as third-party plaintiff therein very nature of a 'declaratory relief special civil action that "the
against third-party defendant Flores, but the writ was later Relief is confined to a case of actual controversy within the
returned unsatisfied. Thereafter she obtained several alias Court's jurisdiction, without the need of injunction, execution or
writs of execution against the same party, the latest having other relief beyond the adjudication of the legal rights which
been issued on April 17, 1961, but they were likewise returned are the subject of controversy between the parties." ( 3 Moran,
unsatisfied. On May 4, 1961, she filed a petition for the Comments on the Rules of Court, p. 146, 1970 ed.) In other
examination under oath of her judgment debtor (Flores) words, the plaintiff Ofilada in said case did not, as he could not
alleging that the latter had fraudulently disposed of his pray for anything to be award or granted to him. Now, as
properties, and, on May 18 of the same year, the court ordered regards the nature and purpose of a third-party complaint,
said judgment debtor to appear before it for examination under Section 1 of Rule 12 of the Rules of 1940 provided:
oath.
SECTION 1. Claim against one not a party to an action.
Upon petition of Flores, however, the court, on June 24, 1961, — When a defendant claims to be entitled against a person not
set aside its order for his examination as well as the writ of a party to the action, hereinafter called the third-party
execution then outstanding, on the ground that "more than ten defendant, to contribution, indemnity, subrogation or any other
years had already elapsed since the judgment against third- relief, in respect of the plaintiff' claim, he may file, with leave of
party defendant Mariano R. Flores and in favor of third-party court, against such person a pleading which shall state the
plaintiff was entered, so that no writ of execution of said nature of his claim and shall be called the third-party complaint.
judgment can now be issued (Sec. 6, Rule 39 of the Rules of
Court)". On August 29, 1961 appellee Bautista filed a petition It is obvious from this definition that a third-party complaint is
for relief from said order of June 24, 1961, but the same was inconceivable when the main case is one for nothing more'
denied by the court, and although on November 15, 1961 she than a declaratory relief. In a third-party complaint, the
filed a notice of appeal from said order on denial, no appeal defendant or third-party plaintiff is supposed to seek
therefrom appears to have been actually perfected. contribution, indemnity, subrogation or any other relief from the
third-party defendant is respect to the claim of the plaintiff
The vendee (Pilar Bautista) would be entitled to recover from against him. In the case at bar, what possible relief could the
the vendor (Mariano Flores) the liquidated damages and Cochingyans, as defendants in Civil Case No. 52318, for
expenses agreed upon "in the event that for any reason declaratory relief, have asked for by way of contribution,
whatsoever Nelly Montilla de Lovina shall refuse or fail to indemnity, subrogation or any other relief from those they have
execute in favor of the vendor a deed of sale covering the said named third-party defendants, the Collector of Customs,
fishpond" (Emphasis supplied). Because Mrs. Lovina refused Commissioner of Customs, Reparations Commission, their co-
defendant and Macario Ofilada, the very plaintiff, in respect to RULE 10
the construction or interpretation that Ofilada was asking the
court to make? At the risk of quoting again part thereof, the Amended and Supplemental Pleadings
complete prayer in the third-party complaint in question reads
thus: Section 1. Amendments in general. — Pleadings may
be amended by adding or striking out an allegation or the
name of any party, or by correcting a mistake in the name of a
party or a mistaken or inadequate allegation or description in
1. Immediately upon the filing of the herein third-party any other respect, so that the actual merits of the controversy
complaint this Honorable Court issue a writ of preliminary may speedily be determined, without regard to technicalities,
mandatory injunction ex-parte, without notice to the other and in the most expeditious and inexpensive manner. (1)
parties, ordering the third-party defendants Commissioner of
Customs and Collector of Customs and Reparations Section 2. Amendments as a matter of right. — A party
Commission to release immediately the third-party plaintiffs the may amend his pleading once as a matter of right at any time
balance of the 202 packages of rayon clothing forming part of before a responsive pleading is served or, in the case of a
the shipment of consumer goods originally consigned to the reply, at any time within ten (10) days after it is served. (2a)
Reparations Commission which arrived in Manila aboard the
SS GUILLERMO on September 10, 1962, and which to the Section 3. Amendments by leave of court. — Except as
present are still under the custody and possession of the provided in the next preceding section, substantial
collector of Customs and Commissioner of Customs upon the amendments may be made only upon leave of court. But such
filing of a bond by the third-party plaintiffs in such amount as leave may be refused if it appears to the court that the motion
may be fixed by this Honorable Court to pay for any damages was made with intent to delay. Orders of the court upon the
that the third-party defendants may suffer should this matters provided in this section shall be made upon motion
Honorable Court find that issuance of the preliminary filed in court, and after notice to the adverse party, and an
mandatory injunction is not proper. opportunity to be heard. (3a)

2. That after hearing on the merits this Honorable Court Section 4. Formal amendments. — A defect in the
confirm and make final its order of mandatory preliminary designation of the parties and other clearly clerical or
injunction. typographical errors may be summarily corrected by the court
at any stage of the action, at its initiative or on motion, provided
The third-party plaintiffs further pray for such other relief as no prejudice is caused thereby to the adverse party. (4a)
may be just and equitable under the premises. (Pp. 87-88,
Record.) Section 5. Amendment to conform to or authorize
presentation of evidence. — When issues not raised by the
According to Moran: pleadings are tried with the express or implied consent of the
parties they shall be treated in all respects as if they had been
Tests of Propriety.—The test to determine whether the claim raised in the pleadings. Such amendment of the pleadings as
for indemnity in a third-party complaint in respect to plaintiff's may be necessary to cause them to conform to the evidence
claim is proper, are (a) whether it arises out of the same and to raise these issues may be made upon motion of any
transaction on which plaintiff's claim is based; or whether the party at any time, even after judgment; but failure to amend
third-party's claim, although arising out of another or different does not effect the result of the trial of these issues. If evidence
contract or transaction, is connected with plaintiff's claim; (U.S. is objected to at the trial on the ground that it is not within the
Commercial Co. v. Guevara, et al., 48 O.G. 612.) (b) whether issues made by the pleadings, the court may allow the
the third-party defendant would be liable to the plaintiff or to the pleadings to be amended and shall do so with liberality if the
defendant for all or part of the plaintiffs claim against the presentation of the merits of the action and the ends of
original defendant, although the third- party defendant's liability substantial justice will be subserved thereby. The court may
arises out of another transaction; or (e) whether the third-party grant a continuance to enable the amendment to be made.
defendant may assert any defense which the third-party (5a)
plaintiff has, or may have, against plaintiff's claim. (Capayas v.
Court of First Instance, 77 Phil. 181.) Failing these tests, the Section 6. Supplemental pleadings. — Upon motion of
complaint is improper. ... (1 Moran, Comments on the Rules of a party the court may, upon reasonable notice and upon such
Court, p. 281, 1970 ed.) terms as are just, permit him to serve a supplemental pleading
setting forth transactions, occurrences or events which have
It is thus too evident to call for more elaborate discussion that happened since the date of the pleading sought to be
respondent court s action in allowing the filing of Cochingyans' supplemented. The adverse party may plead thereto within ten
third-party complaint completely disregarded, due presumably (10) days from notice of the order admitting the supplemental
to ignorance thereof, the basic concepts of the remedies of pleading. (6a)
declaratory relief and third-party complaint.
Section 7. Filing of amended pleadings. — When any
Moreover, respondent court also paid no heed to the pleading is amended, a new copy of the entire pleading,
requirement of Section 2 of Rule 12 of the 1940 Rules to the incorporating the amendments, which shall be indicated by
effect that: "Before the service of his answer a defendant may appropriate marks, shall be filed. (7a)
move ex parte or, after the service of his answer, on notice to
the plaintiff, for leave as third- party plaintiff to file a complaint Section 8. Effect of amended pleadings. — An
against a third-party defendant." In the present case, it is a fact amended pleading supersedes the pleading that it amends.
that the motions of the Cochingyans for leave to file their third- However, admissions in superseded pleadings may be
party complaint and for the admission thereof were granted ex received in evidence against the pleader, and claims or
parte notwithstanding that the trial of the case had already defenses alleged therein not incorporated in the amended
been terminated. pleading shall be deemed waived. (n)
the CA, saying that even though the bills of lading were not
RULE 11 formally presented as evidence, the same were sufficiently
referred to in the pleadings of both parties. Hence, it was
Section 7. Record of pre-trial. — The proceedings in deemed judicially admitted and no evidence was required to
the pre-trial shall be recorded. Upon the termination thereof, prove its existence.
the court shall issue an order which shall recite in detail the
matters taken up in the conference, the action taken thereon,
the amendments allowed to the pleadings, and the agreements
or admissions made by the parties as to any of the matters FACTS:
considered. Should the action proceed to trial, the order shall,
explicitly define and limit the issues to be tried. The contents of • Petitioners Philippine American General Insurance Co.
the order shall control the subsequent course of the action, (PHILAMGEN) and Tagum Plastics (TAGUM) were the
unless modified before trial to prevent manifest injustice. (5a, insurers and importers, respectively, of an order of
R20) polyethylene (the basic material for your common plastics).

• The polyethylenes are to be shipped from F. E. Zuellig in the


United States through an Indian ship, SS Vishva Yash, and are
PHILIPPINE AMERICAN GENERAL INSURANCE CO. AND to be received at Manila. After which, the subject matter is to
TAGUM V. SWEET LINES be shipped to Davao, TAGUM’s place of business.

• When the Indian vessel arrived at Manila, it sought the


services of respondent Sweet Lines, Inc. for the inter-island
DOCTRINES: shipment to Davao.

• Issues may accordingly be taken cognizance of by the court • However, when the M/V Sweet Love, owned and operated by
even if not inceptively raised as a defense so long as its Sweet Lines, arrived at Davao, petitioners found that the some
existence is plainly apparent on the face of relevant pleadings. of the imported polyethylene were undelivered or damaged.

• Actionable documents must be properly pleaded either as • For this reason, petitioners filed suit against respondent
causes of action or defenses, and the genuineness of which Sweet Lines and the Davao Veterans Arrastre which handled
are deemed admitted unless specifically denied under oath by the cargoes at the Davao port.
the adverse party.
o The basis for such suit are the bills of lading, which serves as
• Failure to specifically deny the existence of actionable the contract between parties that the goods indicated therein
documents amounts to an admission. Judicial admissions are are to be delivered complete in number and in the condition
conclusive, no evidence being required to prove the same. specified.

• Before an action can properly be commenced all the essential o Militating against the petitioners, however, is the prescriptive
elements of the cause of action must be in existence. period included in the bills of lading. It states that any action
arising from shortage or damages must be brought within sixty
• The right of action does not arise until the performance of all (60) days from accrual of right of action.
conditions precedent to the action and may be taken away by
the running of the statute of limitations, through estoppel, or by o Also, notice of claims for loss or damages is required to be
other circumstances which do not affect the cause of action. given to the carrier before the institution of judicial claims.

• Performance or fulfilment of all conditions precedent upon • The bills of lading were not formally offered as evidence;
which a right of action depends must be sufficiently alleged, hence it was not shown that a contractual prescriptive period
considering that the burden of proof to show that a party has a was indicated therein.
right of action is upon the person initiating the suit.
• The Trial Court ruled in favor of petitioners PHILAMGEN and
TAGUM, but the CA reversed on the basis of prescription.
Hence, this petition for review on certiorari.
EMERGENCY RECIT

Petitioner Tagum Plastics (TAGUM), from Davao, imported


polyethylene [basic plastic material] from F. E. Zuellig in ISSUES:
America. Co-petitioner Philippine American General Insurance
(PHILAMGEN) is its insurer. The shipment has to first arrive in 1. Whether or not the CA correctly ruled on the basis of
Manila before it can be interisland shipped to Davao. prescription even without formal evidence of its existence.
Respondent Sweet Lines was hired to ferry said shipment to
Davao. Upon arrival at Davao, it was found that some of the 2. Assuming arguendo that a prescriptive period exists in the
imported plastics were undelivered or damaged. Petitioners contract, on not finding such as null and void for being contrary
filed suit on the basis of the bills of lading. Unfortunately, said to public policy as contracts of adhesion.
bills of lading contain prescriptive periods of sixty (60) days to
file for claims of loss/damages. It also required notice to 3. Assuming further that such is valid and legal, in not finding
respondent carrier before judicial claims may be had. The bills that petitioners substantially complied therewith.
of lading, however, were not formally presented as evidence
during trial. The RTC ruled in favor of importer-petitioner, but
the CA reversed on the basis of prescription. The SC upheld
HELD/RATIO:
1. YES, because such was sufficiently raised in the pleadings. recovery is unreasonable and that SLI has the burden of
Ruling on Prescription EVEN without formal evidence of its proving otherwise, citing the earlier case of Southern Lines, Inc.
existence. vs. Court of Appeals, et al.

• The litigation obviously revolves on such bills of lading which • BUT the validity of a contractual limitation of time for filing the
are practically the documents or contracts sued upon, hence, suit has generally been upheld as such stipulation merely
they are inevitably involved and their provisions cannot be affects the plaintiff's remedy and does not affect the liability of
disregarded in the determination of the relative rights of the the defendant.
parties thereto.
• In the absence of any statutory limitation and subject only to
• Respondent court correctly passed upon the matter of the requirement on the reasonableness of the stipulated
prescription, since that defense was so considered and limitation period, the parties to a contract of carriage may fix by
controverted by the parties. agreement a shorter time for the bringing of suit on a claim for
the loss of or damage to the shipment than that provided by
• Since petitioners are suing on the basis of contractual the statute of limitations.
obligations indicated in the bills of lading, such bills can be
categorized as actionable documents which under the Rules of • Such limitation is not contrary to public policy for it does not in
Court must be properly pleaded either as causes of action or any way defeat the right to recover, but merely requires the
defenses, and the genuineness and due execution of which assertion of that right by action at an earlier period than would
are deemed admitted unless specifically denied under oath by be necessary to defeat it through the operation of the ordinary
the adverse party. statute of limitations.

• Failure to specifically deny the existence of the instruments in • The fundamental reason or purpose of such a stipulation is
question amounts to an admission. not to relieve the carrier from just liability, but reasonably to
inform it that the shipment has been damaged and that it is
• Judicial admissions, verbal or written, made by the parties in charged with liability therefor.
the pleadings or in the course of the trial or other proceedings
in the same case are conclusive, no evidence being required to
prove the same, and cannot be contradicted unless shown to
have been made through palpable mistake or that no such 3. NO, because petitioners have not substantially complied
admission was made. with the conditions precedent to their right of action.

• In the case at bar, prescription as an affirmative defense was Is there substantial compliance by petitioner with regard to the
seasonably raised by respondent Sweet Lines in its answer, prescriptive period?
except that the bills of lading embodying the same were not
formally offered in evidence. • Before an action can properly be commenced all the essential
elements of the cause of action must be in existence, that is,
• Petitioner specifically replied to such defense in respondent’s the cause of action must be complete. All valid conditions
answer, but it failed to controvert the existence of the bills of precedent to the institution of the particular action, whether
lading. It is thus in the nature of a negative pregnant. prescribed by statute, fixed by agreement of the parties or
Consequently, they impliedly admitted the same when they implied by law must be performed or complied with before
merely assailed the validity of subject stipulations. Petitioners commencing the action, unless the conduct of the adverse
MUST SPECIFICALLY DENY THE EXISTENCE OR party has been such as to prevent or waive performance or
PRESENTATION OF EVIDENCE. This is petitioners’ reply to excuse non-performance of the condition
respondent’s answer:
• Stipulations in bills of lading requiring notice of claim for loss
o “In connection with Pars. 14 and 15 of defendant Sweet or damage is a condition precedent. The carrier is not liable if
Lines, Inc.'s Answer, plaintiffs state that such agreements are notice is not given in accordance with the stipulation.
what the Supreme Court considers as contracts of adhesion
and, consequently, the provisions therein which are contrary to • The bills of lading, are reasonable conditions precedent, they
law and public policy cannot be availed of by answering are not limitations of action. Being conditions precedent, their
defendant as valid defenses.” performance must precede a suit for enforcement and the
vesting of the right to file suit does not take place until the
• Petitioners failed to touch on the matter of the non- happening of these conditions.
presentation of the bills of lading. Hence it is too late in the day
to now allow the litigation to be overturned on that score, for to RULE 19
do so would mean an over-indulgence in technicalities.
Petitioners' feigned ignorance of the provisions of the bills of Intervention
lading does not deserve serious attention.
Section 1. Who may intervene. — A person who has a
legal interest in the matter in litigation, or in the success of
either of the parties, or an interest against both, or is so
2. NO, because contracts of adhesion, while frowned upon, are situated as to be adversely affected by a distribution or other
not absolutely illegal. disposition of property in the custody of the court or of an
officer thereof may, with leave of court, be allowed to intervene
Are the prescriptive periods void for being contracts of in the action. The court shall consider whether or not the
adhesion? intervention will unduly delay or prejudice the adjudication of
the rights of the original parties, and whether or not the
• Petitioners posit that the alleged shorter prescriptive period intervenor's rights may be fully protected in a separate
which is in the nature of a limitation on petitioners' right of
proceeding. (2[a], [b]a, R12) On 5 May 2001, Virra Mall was gutted by fire, requiring
substantial repair and restoration. VMGA thus filed an
Section 2. Time to intervene. — The motion to insurance claim through the insurance broker, respondent
intervene may be filed at any time before rendition of judgment Winternitz Associates Insurance Company, Inc. (Winternitz).
by the trial court. A copy of the pleading-in-intervention shall be Thereafter, the proceeds of the insurance were released to
attached to the motion and served on the original parties. (n) VMGA.

Section 3. Pleadings-in-intervention. — The intervenor On 3 September 2001, Ortigas entered into a Contract of
shall file a complaint-in-intervention if he asserts a claim Lease (Second Contract of Lease) with Uy effective 2
against either or all of the original parties, or an answer-in- November 2001 to 31 December 2004. On 11 September 2001,
intervention if he unites with the defending party in resisting a the latter assigned and transferred to petitioner Virra Mall
claim against the latter. (2[c]a, R12) Tenants Association (VMTA) all his rights and interests over
the property.
Section 4. Answer to complaint-in-intervention. — The
answer to the complaint-in-intervention shall be filed within
fifteen (15) days from notice of the order admitting the same,
unless a different period is fixed by the court. (2[d]a, R12) On 7 February 2003, Ortigas filed a Complaint for Specific
Performance with Damages and Prayer for Issuance of a Writ
of Preliminary Attachment against several defendants,
RULE 3 including herein respondents. It accused them of fraud,
Section 6. Permissive joinder of parties. — All persons misappropriation and conversion of substantial portions of the
in whom or against whom any right to relief in respect to or insurance proceeds for their own personal use unrelated to the
arising out of the same transaction or series of transactions is repair and restoration of Virra Mall.
alleged to exist, whether jointly, severally, or in the alternative,
may, except as otherwise provided in these Rules, join as Issue:
plaintiffs or be joined as defendants in one complaint, where
any question of law or fact common to all such plaintiffs or to Whether or not Virra Mall Tenant Association has cause of
all such defendants may arise in the action; but the court may action and legal interest in the litigation.
make such orders as may be just to prevent any plaintiff or
defendant from being embarrassed or put to expense in Held:
connection with any proceedings in which he may have no
interest. (6n) Yes. In the case at bar, VMTA, in its Complaint-in-Intervention,
explicitly laid down its cause of action as follows:

Virra Mall Tenants Association Inc vs Virra Mall Greenhills Pursuant to and by virtue of such claim, defendant VMGA and
Association defendant VMGA Board Members, impleaded as party
defendants herein, received, at various times, from their
GR No. 182902 October 5, 2011 insurance broker, and it is in their custody, the insurance
proceeds arising out of such claim which, as of January 8,
Facts: 2003, aggregated P48.6-Million. Having failed to deliver the
said proceeds to the real beneficiary inspite of due notice and
Ortigas & Company, Limited Partnership (Ortigas) is the owner demand, plaintiff Ortigas herein instituted the present action
of the Greenhills Shopping Center (GSC). On 5 November against all the defendants to compel delivery of the said
1975, Ortigas and Virra Realty Development Corporation (Virra insurance proceeds which are being unlawfully and illegally
Realty) entered into a Contract of Lease (First Contract of withheld by all the defendant VMGA and defendant VMGA
Lease) over a portion of the GSC. The 25-year lease was to Board Members inspite of written demands made therefor.
expire on 15 November 2000. Pursuant thereto, Virra Realty Worse, a portion of said insurance proceeds, aggregating
constructed a commercial building, the Virra Mall Shopping P8.6-Million had already been disbursed and misappropriated
Center (Virra Mall), which was divided into either units for lease in breach of trust and fiduciary duty. (Emphasis supplied.)
or units whose leasehold rights were sold.

Thereafter, Virra Realty organized respondent Virra Mall


Greenhills Association (VMGA), an association of all the It is clear from the foregoing allegations that VMTAs purported
tenants and leasehold right holders, who managed and right is rooted in its claim that it is the real beneficiary of the
operated Virra Mall. In the First Contract of Lease, VMGA insurance proceeds, on the grounds that it had (a) facilitated
assumed and was subrogated to all the rights, obligations and the repair and restoration of the insured infrastructure upon the
liabilities of Virra Realty. orders of Ortigas, and (b) advanced the costs thereof.
Corollarily, respondents have a duty to reimburse it for its
On 22 November 2000, VMGA, through its president, William expenses since the insurance proceeds had already been
Uy (Uy), requested from Ortigas the renewal of the First issued in favor of respondent VMGA, even if the latter was not
Contract of Lease. rightfully entitled thereto. Finally, the imputed act or omission
on the part of respondents that supposedly violated the right of
VGMA secured two insurance policies to protect Virra Mall VMTA was respondent VMGAs refusal, despite demand, to
against damage by fire and other causes. However, these release the insurance proceeds it received to reimburse the
insurance coverages expired simultaneously with the First former for the expenses it had incurred in relation to the
Contract of Lease on 15 November 2000.[6] Subsequently, on restoration and repair of Virra Mall. Clearly, then, VMTA was
13 March 2001, VGMA acquired new sets of insurance policies able to establish its cause of action.
effective 10 January 2001 to 31 December 2001.
VMTA was also able to show its legal interest in the matter in pleading. (6a)
litigation VMGAs insurance proceeds considering that it had
already advanced the substantial amount of P18,902,497.75 Section 7. Filing of amended pleadings. — When any
for the repair and restoration of Virra Mall. That VMTA seeks pleading is amended, a new copy of the entire pleading,
reimbursement from Ortigas is precisely the reason why incorporating the amendments, which shall be indicated by
intervention is proper. The main issue in Civil Case No. 69312 appropriate marks, shall be filed. (7a)
is whether Ortigas has a contractual right to the insurance
proceeds received by VMGA. Thus, the recoupment by VMTA Section 8. Effect of amended pleadings. — An
of the expenses it incurred in the repair of Virra Mall depends amended pleading supersedes the pleading that it amends.
on the success of either party in the main case. VMTA However, admissions in superseded pleadings may be
therefore has an undeniable stake in Civil Case No. 69312 that received in evidence against the pleader, and claims or
would warrant its intervention therein defenses alleged therein not incorporated in the amended
pleading shall be deemed waived. (n)
RULE 10
RULE 18
Amended and Supplemental Pleadings
Section 7. Record of pre-trial. — The proceedings in
Section 1. Amendments in general. — Pleadings may the pre-trial shall be recorded. Upon the termination thereof,
be amended by adding or striking out an allegation or the the court shall issue an order which shall recite in detail the
name of any party, or by correcting a mistake in the name of a matters taken up in the conference, the action taken thereon,
party or a mistaken or inadequate allegation or description in the amendments allowed to the pleadings, and the agreements
any other respect, so that the actual merits of the controversy or admissions made by the parties as to any of the matters
may speedily be determined, without regard to technicalities, considered. Should the action proceed to trial, the order shall,
and in the most expeditious and inexpensive manner. (1) explicitly define and limit the issues to be tried. The contents of
the order shall control the subsequent course of the action,
Section 2. Amendments as a matter of right. — A party unless modified before trial to prevent manifest injustice. (5a,
may amend his pleading once as a matter of right at any time R20)
before a responsive pleading is served or, in the case of a
reply, at any time within ten (10) days after it is served. (2a)

Section 3. Amendments by leave of court. — Except as Surigao mines


provided in the next preceding section, substantial
amendments may be made only upon leave of court. But such Gumabay v Baralin
leave may be refused if it appears to the court that the motion
was made with intent to delay. Orders of the court upon the FACTS:
matters provided in this section shall be made upon motion
filed in court, and after notice to the adverse party, and an Celestina Gumabay sued defendants in the Court of First
opportunity to be heard. (3a) Instance of Cagayan to recover possession of a parcel of
cornland assessed in her name. She alleged that the
Section 4. Formal amendments. — A defect in the defendants forcibly entered the land. The defendants moved to
designation of the parties and other clearly clerical or dismiss the complaint on the ground that, inasmuch as it
typographical errors may be summarily corrected by the court alleged a cause of action for forcible entry, which occurred
at any stage of the action, at its initiative or on motion, provided within one year before the complaint was filed, the Court of
no prejudice is caused thereby to the adverse party. (4a) First Instance had no jurisdiction over the case. It should be
filed the proper inferior court. Without awaiting the resolution of
Section 5. Amendment to conform to or authorize that motion, Celestina Gumabay filed an amended complaint
presentation of evidence. — When issues not raised by the wherein she alleged that the defendants claimed to be the
pleadings are tried with the express or implied consent of the owners of the land. She transformed her forcible entry action
parties they shall be treated in all respects as if they had been into an action to quiet title. A copy of that amended complaint
raised in the pleadings. Such amendment of the pleadings as was personally serve on defendants' counsel. The lower court
may be necessary to cause them to conform to the evidence admitted the amended complaint, ordered the defendants to
and to raise these issues may be made upon motion of any answer it, and denied the motion to dismiss. Celestina in her
party at any time, even after judgment; but failure to amend motion asked that the defendants be declared in default for not
does not effect the result of the trial of these issues. If evidence having answered her amended complaint.
is objected to at the trial on the ground that it is not within the
issues made by the pleadings, the court may allow the The defendants contend that the lower court erred in not
pleadings to be amended and shall do so with liberality if the dismissing the original complaint, in admitting the amended
presentation of the merits of the action and the ends of complaint, in assuming that it acquired jurisdiction over their
substantial justice will be subserved thereby. The court may persons on the basis of the amended complaint even without
grant a continuance to enable the amendment to be made. service of new summons, in declaring them in default, and in
(5a) not granting them relief from the judgment by default.

Section 6. Supplemental pleadings. — Upon motion of ISSUE:


a party the court may, upon reasonable notice and upon such
terms as are just, permit him to serve a supplemental pleading Whether the lower court erred in not dismissing the original
setting forth transactions, occurrences or events which have complaint, in admitting the amended complaint, in assuming
happened since the date of the pleading sought to be that it acquired jurisdiction over their persons on the basis of
supplemented. The adverse party may plead thereto within ten the amended complaint even without service of new summons,
(10) days from notice of the order admitting the supplemental
in declaring them in default, and in not granting them relief • ISL and British Steel sepaately moved for dismissal of
from the judgment by default. the complaint on the ground that it failed to state a cause of
action against them.
RULING:
• RTC denied the motion to dismiss.
Those contentions cannot sustained. The original complaint for
forcible entry contained the basic prayer "that the plaintiff be • ISL then filed its answer to the complaint.
declared the absolute owner of the land in question". That relief
was retained in the amended complaint. The only difference • British Steel, on the other hand, filed a petition for
between the original and amended complaints is that the latter certiorari and prohibition in the CA.
contained the additional allegation that the "defendants are
now asserting and claiming title and absolute ownership over • Meanwhile, Remington sought to amend its complaint
the land in question which is adverse and against the interest by adding certain allegations that are constitutive of a cause of
of the plaintiff". action against British Steel.

The plaintiff explained that she had to amend her complaint in • Remington then filed a Manifestation and Motion in
order that the "real matter in dispute", which is "the question of the certiorari and prohibition case pending in the CA. In said
ownership", may be "determined in a single proceeding, Manifestation and Motion, Remington informed te CA that it
thereby avoiding multiplicity of suits" (16 Record on Appeal). filed a Motion to Admit Amended Complaint before the RTC.

We hold that the trial court's order admitting the amended • TRIAL COURT noted Remington’s Amended
complaints is in consonance with the object of the Rules of Complaint and held the proceeding in abeyance until final
Court to assist the parties in obtaining just, speedy and resolution by the CA of the certiorari and prohibition case.
inexpensive determination of every action and proceeding (Sec.
2, Rule 1). • CA granted the writ of certiorari and ordered the trial
judge to dismiss the Remington’s complaint against British
To dismiss the original complaint and to require the plaintiff to Steel, without prejudice.
file another action to quiet title would have resulted in circuitour,
dilatory and expensive proceeding which, in the case of pauper
litigant like Celestina Gumabay, should have been avoided, as
it was a prudently avoided by the trial court. Issue

For the same reasons, defendants' theory that new summons WON the CA correctly ordered the dismissal of the complaint
shoud have been issued for the amended complaint is against British Steel, despite the fact that Remington had
untenable. The trial court had already acquired jurisdiction over exercised its right to ament the defective complaint under Sec.
the person of the defendants when they were served with 2 Rule 10 of the RoC.
summons on the basis of the original complaint and when they
appeared and filed a motion to dismiss.

Defendants' two lawyers were given plenty to time to answer Held


the amended complaint. Their failure to answer was
inexcusable. The answer attached to their petition for relief NO. Prior to the filing of an answer, the plaintiff has the
form judgment does not contain any meritorious defense. absolute right to amend the complaint whether a new cause of
action or change in theory is introduced (Sec 2, Rule 10). The
Therefore, to set aside the judgment by default and grant a reason is implied in Sec. 3, Rule 10, which disallows
new trial would be an Idle ceremony. There is no probability substantial amendments without leave of court after an answer
that defendants; evidence would justify a reversal of the has been served, because any material change in the
judgment by defauld. (Vda. de Yulo vs. Chua Chuco, 87 Phil. allegations contained in the complaint could prejudice the
448. 449; Gonzalez vs. Amon, 98 Phil. 587; Miranda vs. rights of the defendant who has already set up a defense in his
Legaspi, 92 Phil. 290; Baquiran vs Court of Appeals, 112 Phil. answer. If the defendant has not yet filed an answer, then
764, 771). changes in the complaint cannot result in a violation of his
rights since said defendant has not presented any defense that
Remington Industrial Sales Corp v CA can be altered or affected by the amendment of the complaint.

May 29, 2002

Ynares-Santiago, J. Further, the right granted to the plaintiff to amend his complaint
before an answer has been served is not precluded by the
defendant’s filing of a motion to dismiss or any other
proceeding contesting the complaint’s sufficiency. Otherwise,
Facts the right to amend a pleading under Sec. 2, Rule 10 will be
rendered ineffectual since all a defendant has to do is to
• Petitioner Remington Industrial filed a complaint for challenge the adequacy of a complaint before he files an
sum of money and damagaes arising from breach of contract answer thereto.
against principal defendant Industrial Steels, Ltd (ISL). Ferro
Trading GMBH (Ferro) and respondent British Steel (Asia) Ltd.
Were impleaded as alternative defendants.
Moreover, amendment of pleadings is favored and should be
liberally allowed in the interest of justice and to avoid delay of
trials and multiplicity of suits.
Court in a petition for review docketed as G.R. No. 167998. In
Our Decision dated April 27, 2007, we affirmed the CA's ruling
Lastly, the fact that other defendants have filed their answers and decreed that Planters Bank may apply for and is entitled to
to he complaint does not bar Remington’s right to amend its a writ of possession as the purchaser of the property in the
complaint against British Steel. Where some, but not all, of the foreclosure sale,
defendants have answered, the plaintiff may still amend his
complaint against the non-answering defendant, but not as Armed with the above ruling, Planters Bank filed before the
against the other defendants who have already answered. RTC-San Fernando a motion to set ex-parte hearing for the
issuance of a writ of possession. LZK Holdings opposed the
motion. In an Order dated April 2, 2008, the RTC-San
Fernando denied the opposition and set the hearing on April 14,
Dispositive 2008. On April 8, 2008, the RTC-San Fernando issued another
Order declaring the scheduled hearing moot and academic and
Remington’s petition for certiorari granted. CA decision set granting Planter Bank's ex-parte motion for the issuance of a
aside. RTC ordered to admit Remington’s Amended Complaint. writ of possession which was filed as early as December 27,
1999. The decretal portion of the order reads:
Lzk v Planters

FACTS:
ISSUE:
LZK Holdings obtained a loan from Planters Bank and secured
the same with a Real Estate Mortgage over its lot located in La Whether or not the principle of conclusiveness of judgment, the
Union. On September 21, 1998, the lot was sold at a public right of Planter's Bank to a writ of possession as adjudged in
auction after Planters Bank extrajudicially foreclosed the real their previous case is binding and conclusive on the parties
estate mortgage thereon due to LZK Holdings' failure to pay its
loan. Planters Bank emerged as the highest bidder during the
auction sale and its certificate of sale was registered on March
16, 1999. RULING:

On April 5, 1999, LZK Holdings filed before the RTC of Makati Yes. The doctrine of res judicata by conclusiveness of
City, Branch 150, a complaint for annulment of extra judicial judgment postulates that "when a right or fact has been
foreclosure, mortgage contract, promissory note and damages. judicially tried and determined by a court of competent
LZK Holdings also prayed for the issuance of a temporary jurisdiction, or when an opportunity for such trial has been
restraining order (TRO) or writ of preliminary injunction to given, the judgment of the court, as long as it remains
enjoin the consolidation of title over the lot by Planters Bank. unreversed, should be conclusive upon the parties and those
in privity with them."
Planters Bank filed an ex-parte motion for the issuance of a
writ of possession with the RTC-San Fernando. All the elements of the doctrine are present in this case. The
final judgment in G.R. No. 167998 was rendered by the Court
Three (3) days before the expiration of LZK Holdings' pursuant to its jurisdiction over the review of decisions and
redemption period, the RTC-Makati issued a TRO effective for rulings of the CA. It was a judgment on the merits of Planters
20 days enjoining Planters Bank from consolidating its title Banks's right to apply for and be issued a writ of possession.
over the property. Then, the RTC-Makati ordered the issuance Lastly, the parties in G.R. No. 167998 are the same parties
of a writ of preliminary injunction for the same purpose but the involved in the present case
writ was issued only on June 20, 2000 upon LZK Holdings'
posting of a P40,000.00 bond. Hence, LZK Holdings can no longer question Planter Bank's
right to a writ of possession over the subject property because
In the meantime, Planters Bank succeeded in consolidating its the doctrine of conclusiveness of judgment bars the relitigation
ownership over the property on April 24, 2000. However, the of such particular issue
proceedings for its ex-parte motion for the issuance of a writ of
possession was suspended by the RTC-San Fernando in an Lambino v Presiding Judge
Order in view of the TRO and writ of preliminary injunction
issued by the RTC-Makati. Planters Bank moved for
reconsideration but its motion was denied by the RTC-San
Fernando in an Order dated September 1, 2000. Ada v Baylon

Meanwhile, upon motion of LZK Holdings, the RTC-Makati


declared as null and void the consolidated title of Planters
Bank in an Order dated June 2, 2000. Such ruling was affirmed Son v Son
by the CA in a Decision dated February 26, 2004 in CA-G.R.
SP No. 59327. When the matter reached the Court via G.R. No. MODES OF FILING
164563, we sustained the CA's judgment in our Resolution7 Rule 13
dated September 13, 2004.
Section 2. Filing and service, defined. — Filing is the
Planters Bank also appealed the May 11, 2000 Order of the act of presenting the pleading or other paper to the clerk of
RTC-San Fernando which held in abeyance the resolution of court.
its ex parte motion for the issuance of a writ of possession.
This time, Planters Bank was victorious. The CA granted the Service is the act of providing a party with a copy of the
appeal and annulled the assailed order of the RTC-San pleading or paper concerned. If any party has appeared by
Fernando. Aggrieved, LZK Holdings sought recourse with the
counsel, service upon him shall be made upon his counsel or or he has no office, then by leabing the copy, between
one of them, unless service upon the party himself is ordered the hours of eight in the morning and six in the
by the court. Where one counsel appears for several parties, evening, at the party’s or counsel’s residence, if
he shall only be entitled to one copy of any paper served upon known, with a person of sufficient age and discretion
him by the opposite side. (2a) then residing therein. (Section 6, Rule 13)
[HIERARCHY: Office first then residence]
Section 3. Manner of filing. — The filing of pleadings, - COMPLAINT is not a pleading to be served on the
appearances, motions, notices, orders, judgments and all other other party! –LOL to that quiz question
papers shall be made by presenting the original copies thereof,
plainly indicated as such, personally to the clerk of court or by
sending them by registered mail. In the first case, the clerk of SOLAR v RICAFORT
court shall endorse on the pleading the date and hour of filing.
In the second case, the date of the mailing of motions, FACTS:
pleadings, or any other papers or payments or deposits, as
shown by the post office stamp on the envelope or the registry 1. This is a case for the recovery of possession and
receipt, shall be considered as the date of their filing, payment, damages with a prayer for a writ of replevin. Private
or deposit in court. The envelope shall be attached to the respondents filed their Answer and a copy was furnished to the
record of the case. (1a) counsel of petitioner by registered mail but the pleading did not
contain and written explanation why personal service was not
Section 4. Papers required to be filed and served. — made upon petitioner-plaintiff as required by the Rules of Court.
Every judgment, resolution, order, pleading subsequent to the
complaint, written motion, notice, appearance, demand, offer of
judgment or similar papers shall be filed with the court, and
served upon the parties affected. (2a) 2. On 11 August 1997, petitioner filed a motion to expunge
the "Answer (with Counterclaims)" and to declare herein
Section 11. Priorities in modes of service and filing. — private respondents in default, 5 alleging therein that the latter
Whenever practicable, the service and filing of pleadings and did not observe the mandate of the aforementioned Section 11,
other papers shall be done personally. Except with respect to and that there was: [A]bsolutely no valid reason why
papers emanating from the court, a resort to other modes must defendant[s] should not have personally served plaintiff's . . .
be accompanied by a written explanation why the service or counsel with [a] copy of their answer [as] (t)he office of
filing was not done personally. A violation of this Rule may be defendant's (sic) counsel, Atty. Froilan Cabaltera, is just a
cause to consider the paper as not filed. (n) stone [sic] throw away from the office of [petitioner's] counsel,
with an estimate (sic) distance of about 200 meters more or
Section 12. Proof of filing. — The filing of a pleading or less.
paper shall be proved by its existence in the record of the
case. If it is not in the record, but is claimed to have been filed
personally, the filing shall be proved by the written or stamped
acknowledgment of its filing by the clerk of court on a copy of 3. Petitioner further alleged that the post office was "about
the same; if filed by registered mail, by the registry receipt and ten (10) times farther from the office of Atty. Cabaltera,"
by the affidavit of the person who did the mailing, containing a
full statement of the date and place of depositing the mail in
the post office in a sealed envelope addressed to the court,
with postage fully prepaid, and with instructions to the ISSUE: Whether or not respondent judge committed grave
postmaster to return the mail to the sender after ten (10) days abuse of discretion amounting to lack or excess of jurisdiction
if not delivered. (n) in denying petitioner's motion to expunge private respondents'
Notes: answer with counterclaims on the ground that said pleading
Pers Regist Ordin Substit Public Any was not served personally
onal ered ary ution ation
Mail Mail
Filing X X
RULING: We thus take this opportunity to clarify that under
Servic X X X X
Section 11, Rule 13 of the 1997 Rules of Civil Procedure,
e of
personal service and filing is the general rule, and resort to
Pleadi
other modes of service and filing, the exception. Henceforth,
ng
whenever personal service or filing is practicable, in light of the
Servic X X X circumstances of time, place and person, personal service or
e of filing is mandatory. Only when personal service or filing is not
Judg practicable may resort to other modes be had, which must then
ment be accompanied by a written explanation as to why personal
Servic X X X (if X service or filing was not practicable to begin with. In adjudging
e of unkno (extra the plausibility of an explanation, a court shall likewise consider
Summ wn) - the importance of the subject matter of the case or the issues
ons territo involved therein, and the prima facie merit of the pleading
rial) sought to be expunged for violation of Section 11. This Court
cannot rule otherwise, lest we allow circumvention of the
Personal Service of Pleadings & Judgment: innovation introduced by the 1997 Rules in order to obviate
- May be made by delivering personally a copy to the delay in the administration of justice.
party or his counsel, or by leaving it in his office with
his clerk or with a person having charge thereof. If no
person is found in his office, or his office is not known,
Returning, however, to the merits of this case, in view of the served either personally or by registered mail. When a party
proximity between the offices of opposing counsel and the summoned by publication has failed to appear in the action,
absence of any attendant explanation as to why personal judgments, final orders or resolutions against him shall be
service of the answer was not effected, indubitably, private served upon him also by publication at the expense of the
respondents' counsel violated Section 11 of Rule 13 and the prevailing party. (7a)
motion to expunge was prima facie meritorious. However, the
grant or denial of said motion nevertheless remained within the Section 10. Completeness of service. — Personal
sound exercise of the trial court's discretion. Thus, as guided service is complete upon actual delivery. Service by ordinary
by Section 6, Rule 1 of the 1997 Rules of Civil Procedure, mail is complete upon the expiration of ten (10) days after
which ordains that the Rules shall be liberally construed in mailing, unless the court otherwise provides. Service by
order to promote their objective of securing a just, speedy and registered mail is complete upon actual receipt by the
inexpensive disposition of every action or proceeding, as well addressee, or after five (5) days from the date he received the
as by the dictum laid down in Alonso v. Villamor, 16 Phil. 315 first notice of the postmaster, whichever date is earlier. (8a)
[1910], the trial court opted to exercise its discretion in favor of
admitting the "Answer (with Counterclaims)," instead of Rule 25
expunging it from the record.
Section 1. Interrogatories to parties; service thereof. —
Under the same conditions specified in section 1 of Rule 23,
any party desiring to elicit material and relevant facts from any
adverse parties shall file and serve upon the latter written
interrogatories to be answered by the party served or, if the
The 1997 Rules of Civil Procedure took effect only on 1 July party served is a public or private corporation or a partnership
1997, while the questioned "Answer (with Counterclaims)" was or association, by any officer thereof competent to testify in its
filed only on 8 August 1997, or on the 39th day following the behalf. (1a)
effectivity of the 1997 Rules. Hence, private respondents'
counsel may not have been fully aware of the requirements Rule 26
and ramifications of Section 11, Rule 13. In fact, as pointed out
by petitioner's counsel, in another case where private Section 1. Request for admission. — At any time after
respondents' counsel was likewise opposing counsel, the latter issues have been joined, a party may file and serve upon any
similarly failed to comply with Section 11 other party may file and serve upon any other party a written
request for the admission by the latter of the genuineness of
MODES OF SERVICE any material and relevant document described in and exhibited
Rule 13 with the request or of the truth of any material and relevant
matter of fact set forth in the request. Copies of the documents
Section 5. Modes of service. — Service of pleadings shall be delivered with the request unless copy have already
motions, notices, orders, judgments and other papers shall be been furnished. (1a)
made either personally or by mail. (3a)

Section 6. Personal service. — Service of the papers


may be made by delivering personally a copy to the party or SERVICE OF SUMMONS
his counsel, or by leaving it in his office with his clerk or with a Rule 16
person having charge thereof. If no person is found in his Section 1. Grounds. — Within the time for but before
office, or his office is not known, or he has no office, then by filing the answer to the complaint or pleading asserting a claim,
leaving the copy, between the hours of eight in the morning a motion to dismiss may be made on any of the following
and six in the evening, at the party's or counsel's residence, if grounds:
known, with a person of sufficient age and discretion then
residing therein. (4a) (c) That venue is improperly laid;

Section 7. Service by mail. — Service by registered Rule 46


mail shall be made by depositing the copy in the post office in Section 4. Jurisdiction over person of respondent, how
a sealed envelope, plainly addressed to the party or his acquired. — The court shall acquire jurisdiction over the
counsel at his office, if known, otherwise at his residence, if person of the respondent by the service on him of its order or
known, with postage fully prepaid, and with instructions to the resolution indicating its initial action on the petition or by his
postmaster to return the mail to the sender after ten (10) days voluntary submission to such jurisdiction. (n)
if undelivered. If no registry service is available in the locality of
either the senders or the addressee, service may be done by Rule 24
ordinary mail. (5a; Bar Matter No. 803, 17 February 1998) Section 7. Depositions pending appeal. — If an appeal
has been taken from a judgment of a court, including the Court
Section 8. Substituted service. — If service of of Appeals in proper cases, or before the taking of an appeal if
pleadings, motions, notices, resolutions, orders and other the time therefor has not expired, the court in which the
papers cannot be made under the two preceding sections, the judgment was rendered may allow the taking of depositions of
office and place of residence of the party or his counsel being witnesses to perpetuate their testimony for in the event of
unknown, service may be made by delivering the copy to the further proceedings in the said court. In such case the party
clerk of court, with proof of failure of both personal service and who desires to perpetuate the testimony may make a motion in
service by mail. The service is complete at the time of such the said court for leave to take the depositions, upon the same
delivery. (6a) notice and service thereof as if the action was pending therein.
The motion shall state (a) the names and addresses of the
Section 9. Service of judgments, final orders, or persons to be examined and the substance of the testimony
resolutions. — Judgments, final orders or resolutions shall be which he expects to elicit from each, and (b) the reason for
perpetuating their testimony. If the court finds that the
perpetuation of the testimony is proper to avoid a failure or In personam - binding against the parties only (can be done
delay of justice, it may make an order allowing the deposition extraterritorially for a resident merely abroad)
to be taken, and thereupon the depositions may be taken and
used in the same manner and under the same conditions as Action Real or In Prescriptive
are prescribed in these Rules for depositions taken in pending Personal Personam, Period
actions. (7a, R134) Action In Rem,
Quasi In
Rem
Modes of Service (Rule 14) Publiciana Real In Personam 10
1. Personal Reinvindicatoria Real In Personam 10/30/imp
Section 6. Service in person on defendant. — Reconveyance Real In Personam 10
Whenever practicable, the summons shall be served FEUD Real In Personam 1
by handling a copy thereof to the defendant in person, Quieting of Title Real Quasi In Imp
or, if he refuses to receive and sign for it, by tendering Rem
it to him. (7a) Forclosure Real Quasi In 10
2. Substituted Rem
Section 7. Substituted service. — If, for Land Real In Rem Imp
justifiable causes, the defendant cannot be served Registration
within a reasonable time as provided in the preceding Injunction Personal In Personam
section, service may be effected (a) by leaving copies Specific Personal In Personam
of the summons at the defendant's residence with Performance,
some person of suitable age and discretion then Rescission,
residing therein, or (b) by leaving the copies at Damages
defendant's office or regular place of business with Probate of a Will Personal In Rem
some competent person in charge thereof. (8a)
Notes:
Personal Service of Summons: GOMEZ v CA
- Must be personally served by handing a copy thereof
to the defendant in person, or, if he refuses to receive FACTS:
and sign for it, by tendering it to him. (Section 6, Rule
14) Sometime in 1975, spouses Jesus and Caridad Trocino
mortgaged 2 parcels of land to Dr. Yujuico in Cebu City. The
Substituted Service of Pleadings: mortgage was subsequently foreclosed. Respondent-spouses
- May be made by delivering the copy to the clerk of Trocino sold the lands to petitioner- spouses, who in turn
court. (Section 7, Rule 13) redeemed the lands from the mortgagee. However, the
spouses Trocino refused to deliver the titles to petitioner-
Substituted Service of Summons: spouses. Thus, spouses Gomez sued spouses Trocino for
- (a) by leaving copies of summons at the defendant’s delivery of the titles. The husband Trocino died before the suit
residence with some person of suitable age and was filed, thus his children, including Adolfo Trocino and
discretion then residing therein or (b) by leaving Mariano Trocino, were impleaded in the suit. Summons was
copies at the defendant’s office or regular place of served, and it was only received by Caridad Trocino in behalf
business with some competent person in charge of the children. The trial court rendered judgment against the
thereof. (Section 7, Rule 14) [NO HIERARCHY] spouses Trocino and their heirs. Adolfo and Mariano Trocino
petitioned for the annulment of the judgment of the RTC with
The courts acquire jurisdiction over the defendants, in a civil the CA, alleging that no jurisdiction was acquired over them. At
case, through the service of summons upon them in the that time, Adolfo Trocino was a resident of Ohio, USA while
manner required by law or through their voluntary appearance Mariano Trocino was a resident of Talibon, Bohol, and both
in court and their submission to its authority. The proper were not found in Cebu City at the time summons was served.
service of summons differs depending on the nature of the civil
case instituted: whether in personam, in rem or quasi in rem. ISSUES:

In personam – are those actions brought against a 1. What was the nature of the complaint, upon which the
person on the bases of his personal liability manner of the service of summons should be based?
In rem – are actions against the thing itself instead of
against the person The action was an action in personam. While it is a real action
Quasi in rem – where an individual is named as because it affects title to or possession of land, it does not
defendant and the purpose of the proceeding is to automatically follow that the action is one in rem. In a personal
subject his interest in a property to the obligation or action, the plaintiff seeks the recovery of personal property, the
loan burdening the property. enforcement of a contract or the recovery of damages. A real
action is one affecting title to real property or for the recovery
Extraterritorial service of summons applies only where the of possession, or for partition or condemnation of, or
action is in rem or quasi in rem (because they do not need to foreclosure of a mortgage on real property. An action in
acquire over the person), but not if an action is in personam. personam is an action against a person on the basis of his
In rem - binding against all persons personal liability, while an action in rem is an action against the
thing itself, instead of against the person. The present case is
Quasi In Rem - binding against the property (these actions do an action in personam, because it is an action against persons,
not require one to follow a hierarchy - can avail of personal on the basis of their personal liability of non-delivery of titles.
service or publication or any) Thus, personal service of summons upon the private
respondents is essential in order for the court to acquire summons yet been validly served on the defendant, new
jurisdiction over their persons. summons for the amended complaint must be served on him

2. Was there a valid service of summons? 3. If personal - ITC, since at the time the complaint was amended no
service were impossible to comply, what should have been summons had been properly served on the petitioner and it
done? had not yet appeared in court, new summons should have
been issued on the amended complaint. SO, the TC should
There was none. In actions in personam, summons on the have ordered the service of an original summons, not an alias
defendant must be served by handing a copy thereof to the summons (which is just a continuation of an original summons)
defendant in person, or, if he refuses to receive it, by tendering
it to him. In substituted service, it is mandated that the fact of - Nonetheless, alias vs. original = mere nomenclature
impossibility of personal service should be explained in the
proof of service. Where the defendant in an action in personam MANOTOC V. COURT OF APPEALS
is a non-resident who does not voluntarily submit himself to the
authority of the court, personal service of summons within the Facts:
State is essential to acquire jurisdiction over his person. An
exception was accorded in Gemperle v. Schenker wherein Mrs. Agapita Trajano sought the enforcement of a foreign
service of summons through the non-resident’s wife, who was judgment rendered by the US District Court of Hawaii against
a resident of the Philippines, was held valid, as the latter was Ma. Imelda M. Manotoc (Imee Marcos) for the wrongful death
his representative and attorney-in-fact in a prior civil case filed of Mr. Archimedes Trajano committed by military intelligence in
by the non-resident, and the second case was merely an the Philippines allegedly working for Manotoc.
offshoot of the first case. In an action in rem or quasi in rem,
jurisdiction over the person of the defendant is not a The RTC issued summons for Manotoc addressed at
prerequisite to confer jurisdiction on the court provided the Alexandra Homes, Pasig. It was served on a Macky dela Cruz
court acquires jurisdiction over the res, although summons described as a caretaker of her unit. Manotoc failed to file her
must be served upon the defendant for purposes of due answer and was declared in default.
process. Thus, where the defendant is a non-resident and not
found in the Philippines, and: 1. the action affects the personal On October 1993, manotoc filed a motion to dismiss on the
status of the plaintiff; 2. the action relates to, or the subject ground of lack of jurisdiction over her person, stating that she
matter of which is property in the Philippines in which the is not a resident of the said condo and that she does not hold
defendant has or claims a lien or interest; 3. the action seeks office there, as well as that Macky dela Cruz is not her
the exclusion of the defendant from any interest in the property representative or employee. Thus no valid service was made.
located in the Philippines; or 4. the property of the defendant Further, she states that she is a resident of Singapore.
has been attached in the Philippines.
On October 1994, the RTC denied the motion. On December
PHILAM LIFE V. BREVA, 1994, denied her MR for lack of merit.

- respondent Milagros Morales filed a complaint for damages Manotoc filed a petition for certiorari and prohibition with the
and reimbursement of insurance premiums. Complaint stated CA on January 1995, that was denied on March 1997, and the
that petitioner could be served with summons and other court MR denied on April 1997. The CA ruled that:
processes thru its Manager at its branch office in Davao City
1) As per findings of the trial court, the residence of
- Summons served upon Philam’s Davao office and received Manotoc was indeed at Alexandra Homes.
by Insurance Service Officer
2) The disembarkation/embarkation cord and
- Philam filed MTD otg of lack of jurisdiction over its person due certification were hearsay. It rejected a proof of her residency
to improper service of summons. The employee who received in Singapore based on her passport in which two pages were
was not among those enumerated in Rule 14, RoC withheld.

- Morales filed amended complaint alleging that summons may Issue:


also be served at Philam’s principal office in Manila
Whether there was valid substituted service.
- RTC denied MTD and directed service of alias summons in
Manila (improper service of summons not ground for dismissal Held:
because case is still in its initial stage)
No.
- CA held that the service of alias summons vested the RTC
with jurisdiction over the person of petitioner In actions strictly ‘in perosnam’jurisdiction over the person of
the defendant is mandatory and can be complied with valid
HELD: service of summons.

- An alias summons may be served in case of wrongful service If defendant cannot be served, for excusable reason, within a
of summons reasonable time, substituted service can be resorted to.

- ITC, complaint was amended after the petitioner filed the It is extraordinary in character and a derogation of the usual
motion to dismiss. method of service thus rules for such must be faithfully
complied with.
- Where the defendant has already been served summons on
the original complaint, the amended complaint may be served
upon him without need of another summons. But if no
The requirements of valid substituted service if there is service as under section 6; or by publication in a
impossibility of prompt personal service which is 15-30 days for newspaper of general circulation in such places and
the sheriff are: for such time as the court may order, in which case a
copy of the summons and order of the court shall be
1) By leaving copies of summons at defendant’s sent by registered mail to the last known address of
residence with a person of suitable age and discretion residing the defendant, or in any other manner the court may
therein or by leaving copies at the defendant’s office or regular deem sufficient. Any order granting such leave shall
place of business with some competent person in charge. specify a reasonable time, which shall not be less
than sixty (60) days after notice, within which the
2) The sheriff must narrate in specific details how defendant must answer. (17a)
service in person became impossible.
Section 16. Residents temporarily out of the
3) The attempt must be extraordinary and at least three Philippines. — When any action is commenced
times. The person of suitable age and discretion must be at against a defendant who ordinarily resides within the
least 18 years old, able to read the summons written in English, Philippines, but who is temporarily out of it, service
and must be with confidential relation to defendant. A may, by leave of court, be also effected out of the
competent person in charge can be the president or manager. Philippines, as under the preceding section. (18a)

The substituted service was invalid because the sheriff did not RULE 57
comply with the requirements. Macky dela Cruz was not a Section 1. Grounds upon which attachment
representative of Manotoc. Therefore, since there was no valid may issue. — At the commencement of the action or
service of summons, there was no jurisdiction acquired. The at any time before entry of judgment, a plaintiff or any
RTC’s decision is null and void. proper party may have the property of the adverse
party attached as security for the satisfaction of any
3. Publication judgment that may be recovered in the following
Section 14. Service upon defendant whose cases:
identity or whereabouts are unknown. — In any action (f) In an action against a party who does not
where the defendant is designated as an unknown reside and is not found in the Philippines, or on whom
owner, or the like, or whenever his whereabouts are summons may be served by publication. (1a)
unknown and cannot be ascertained by diligent
inquiry, service may, by leave of court, be effected Foreign Corporations (Corporation Code)
upon him by publication in a newspaper of general
circulation and in such places and for such time as Sec. 123. Definition and rights of foreign corporations. - For the
the court may order. (16a) purposes of this Code, a foreign corporation is one formed,
organized or existing under any laws other than those of the
RULE 57 Philippines and whose laws allow Filipino citizens and
Section 1. Grounds upon which attachment corporations to do business in its own country or state. It shall
may issue. — At the commencement of the action or have the right to transact business in the Philippines after it
at any time before entry of judgment, a plaintiff or any shall have obtained a license to transact business in this
proper party may have the property of the adverse country in accordance with this Code and a certificate of
party attached as security for the satisfaction of any authority from the appropriate government agency. (n)
judgment that may be recovered in the following
cases: Sec. 128. Resident agent; service of process. - The Securities
(f) In an action against a party who does not and Exchange Commission shall require as a condition
reside and is not found in the Philippines, or on whom precedent to the issuance of the license to transact business in
summons may be served by publication. (1a) the Philippines by any foreign corporation that such corporation
file with the Securities and Exchange Commission a written
4. Extraterritorial power of attorney designating some person who must be a
Section 12. Service upon foreign private resident of the Philippines, on whom any summons and other
juridical entities. — When the defendant is a foreign legal processes may be served in all actions or other legal
private juridical entity which has transacted business proceedings against such corporation, and consenting that
in the Philippines, service may be made on its service upon such resident agent shall be admitted and held as
resident agent designated in accordance with law for valid as if served upon the duly authorized officers of the
that purpose, or, if there be no such agent, on the foreign corporation at its home office. Any such foreign
government official designated by law to that effect, or corporation shall likewise execute and file with the Securities
on any of its officers or agents within the Philippines. and Exchange Commission an agreement or stipulation,
(14a) executed by the proper authorities of said corporation, in form
and substance as follows:
Section 15. Extraterritorial service. — When the
defendant does not reside and is not found in the "The (name of foreign corporation) does hereby stipulate and
Philippines, and the action affects the personal status agree, in consideration of its being granted by the Securities
of the plaintiff or relates to, or the subject of which is, and Exchange Commission a license to transact business in
property within the Philippines, in which the defendant the Philippines, that if at any time said corporation shall cease
has or claims a lien or interest, actual or contingent, to transact business in the Philippines, or shall be without any
or in which the relief demanded consists, wholly or in resident agent in the Philippines on whom any summons or
part, in excluding the defendant from any interest other legal processes may be served, then in any action or
therein, or the property of the defendant has been proceeding arising out of any business or transaction which
attached within the Philippines, service may, by leave occurred in the Philippines, service of any summons or other
of court, be effected out of the Philippines by personal legal process may be made upon the Securities and Exchange
Commission and that such service shall have the same force
and effect as if made upon the duly-authorized officers of the
corporation at its home office."

Whenever such service of summons or other process shall be


made upon the Securities and Exchange Commission, the
Commission shall, within ten (10) days thereafter, transmit by
mail a copy of such summons or other legal process to the
corporation at its home or principal office. The sending of such
copy by the Commission shall be necessary part of and shall
complete such service. All expenses incurred by the
Commission for such service shall be paid in advance by the
party at whose instance the service is made.

In case of a change of address of the resident agent, it shall be


his or its duty to immediately notify in writing the Securities and
Exchange Commission of the new address. (72a; and n)

Sec. 133. Doing business without a license. - No foreign


corporation transacting business in the Philippines without a
license, or its successors or assigns, shall be permitted to
maintain or intervene in any action, suit or proceeding in any
court or administrative agency of the Philippines; but such
corporation may be sued or proceeded against before
Philippine courts or administrative tribunals on any valid cause
of action recognized under Philippine laws. (69a)

AM No. 11-3-6-SC; new rule on service of summons on foreign


juridical entities.

Section 12, Rule 14 of the Rules of Court is hereby amended


to read as follows:

"SEC. 12. Service upon foreign private juridical entity.



When the defendant is a foreign private juridical entity
which has transacted business in the Philippines,
service may be made on its resident agent designated
in accordance with law for that purpose, or, i f there
be no such agent, on the government official
designated by law to that effect, or on any of its
officers or agents within the Philippines.

If the foreign private juridical entity is not registered in


the Philippines or has no resident agent, service may,
with leave of court, be effected out of the Philippines
through any of the following means:

a) By personal service coursed through the


appropriate court in the foreign country with the
assistance of the Department of Foreign Affairs;

b) By publication once in a newspaper of general


circulation in the country where the defendant may be
found and by serving a copy of the summons and the
court order by-registered mail at the last known
address of the defendant;

c) By facsimile or any recognized electronic means


that could generate proof of service; or

d) B y such other means as the court may in its


discretion direct."

This rule shall take effect fifteen (15) days after


publication in a newspaper of general circulation in
the Philippines.